Types of Cheques:
Types of Cheques – It is an important topic for the candidates who prepare banking awareness for the competitive exams. Here we have added the types of cheques pdf download for your preparation. Also, go through this page to know complete details on different types of cheques.
Types of Cheques topic will have many questions to be covered in the banking exams. The differences between Open Cheque, Order Cheque, Crossed Cheque, or Account Payee Cheque was explained here. A Cheque is called “Open”, only when you can get the cash amount over the bank’s counter. If a Cheque is payable to any person who presents it at the bank’s counter, then it is known as ‘Bearer Cheque’. Likewise here we have provided you with the details about different types of Cheques.
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What is a Cheque?
A cheque is a negotiable financial instrument. It instructs a financial institution to pay the amount specified on it. The amount of that specific currency is paid from the account held in the drawer’s name with that institution. Both the drawer and payee may be legal entities or natural persons. Cheques are order instruments and are not in general payable simply to the bearer as bearer instruments are, but must be paid to the payee.
- Without a date, the cheque is considered invalid.
- The validity of the cheque – 3 months from the date of issue.
- A 9 digit MICR code will make the clearance of the cheque easier. This Magnetic Ink Character Recognition(MICR) code is present at the bottom of the cheque.
Types of Cheques & Explanation
Here we have explained about the different types of cheques.
1.) Open Cheque
A Cheque is called “Open” when it is possible to get cash over the counter at the bank. The holder of an open cheque can do the following,
2.) Crossed Cheque
Since open cheque is subject to risk of theft; it is dangerous to issue such cheques. This risk can be avoided by issuing another type of cheque called “Crossed Cheque”. The payment of such cheque is not made over the counter at the bank. It is only credited to the bank account of the payee. A cheque can be crossed by drawing two transverse parallel lines across the cheque, with or without the writing ‘Account Payee’ or ‘Not Negotiable’. These lines are usually drawn on the upper left-hand corner of the cheque.
3.) Bearer Cheque
A Cheque which is payable to any person who presents it for payment at the bank counter is called ‘Bearer Cheque’. A bearer cheque can be transferred by mere delivery and requires no endorsement.
4.) Order Cheque
An order cheque is payable only to the payee mentioned in the cheque. In such a cheque the word ‘bearer’ may be struck or canceled and the word ‘order’ is written. The payee can transfer an order cheque to someone else by signing his or her name on the back of it.
These are the different types of cheques.
Categorization of Cheques
Apart from the types of cheques, we have given here the categorization of cheques.
Ante-dated Cheques: Cheque in which the drawer mentions the date earlier to the date of presenting it for payment. For example, a cheque issued on 20th August, 2014 may bear a date 5th August 2014.
Stale Cheque: A cheque that is issued today must be presented to the bank for payment within a stipulated period. After the expiry of that period, on payment will be made and it is then called ‘Stale Cheque’.
Mutilated Cheque: In case a cheque is torn into two or more pieces and presented for payment, such cheque is called “Mutilated Cheque”. The bank will not make payment against such a cheque without getting confirmation of the drawer. But is a cheque is torn at the corners and no material fact is erased or canceled, the bank may make payment against such a cheque
Post-date Cheque: Cheque on which drawer mentions a date which is subsequent to the date on which it is presented, is called ‘Post-dated Cheque’. For example, if a cheque presented on 5th April 2015 bears a date of 20th April 2015, is a post-dated cheque. The bank will make payment only mon or after 20th April 2015.
Blank Cheque: In this Case, the drawer use put their sign alone and the Other columns will be left as empty.
Self Cheque: The Account holder can draw the money for their self-use from their home branch is called as Self Cheque.
Types of Cheques – Important Terms
Payee
A payee is a person or organization that receives a payment. The payment can be in any form, including cash, a check, or an electronic transfer of funds.
Payer
The person, who paying money for goods or services is the payer. This includes any person or corporation paying for a purchase or one providing the payment in a transaction.
Drawee
It describes the party that has been directed by the depositor to pay a certain sum of money to the person presenting the Cheque or draft.
Drawer
A person who signs a Cheque to his or her bank ordering the latter to pay the face amount of the Cheque to the payee.
So, candidates prepare for the bank exams. This type of cheque topic is a very important part of your banking awareness preparation.
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