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What is a cheques - Definition and Types of Cheques

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Do you know what is a cheques? In this post, we are going to learn everything that you should know about cheques, the definition, and all types.

What is a cheques: Definition and Types of Cheques

Do you know what is a cheques? In this post, we are going to learn everything that you should know about cheques, the definition, and all types of cheques.

A check is a major negotiable instrument that may be delivered by hand alone. Payments may be made securely and conveniently using checks. It is less dangerous and there is less chance of losing money.

Cheques are the backbone of the banking industry and is still a very important negotiable instrument.

Stay with me and let's find out what is a cheques: Definition and Types of Cheques.


Definition of a Cheque: What is a cheques?

Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument.

What is a cheques: Definition and Types of Cheques


Different Kinds / Types of Cheques

1. Bearer Cheque

When the words "or bearer" appearing on the face of the cheque are not cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. However, such cheques are risky, this is because if such cheques are lost, the finder of the cheque can collect payment from the bank.


2. Order Cheque

When the word "bearer" appearing on the face of a cheque is cancelled and when in its place the word "or order" is written on the face of the cheque, the cheque is called an order cheque. Such a cheque is payable to the person specified therein as the payee, or to any one else to whom it is endorsed (transferred).


3. Uncrossed / Open Cheque

When a cheque is not crossed, it is known as an "Open Cheque" or an "Uncrossed Cheque". The payment of such a cheque can be obtained at the counter of the bank. An open cheque may be a bearer cheque or an order one.


4. Crossed Cheque

Crossing of cheque means drawing two parallel lines on the face of the cheque with or without additional words like "& CO." or "Account Payee" or "Not Negotiable". A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee's account.


5. Anti-Dated Cheque

If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as "anti-dated cheque". Such a cheque is valid upto three months from the date of the cheque.


6. Post-Dated Cheque

If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date on the cheque.


7. Stale Cheque

If a cheque is presented for payment after three months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank.

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Where can I find the Cheque Number?

In case you wish to track the status of the cheque, you will need to provide the cheque number. The identity of the cheque can be found only with the help of the cheque number. The first six numbers that are present on the bottom of the cheque is the cheque number.

Features of Cheque


Features of Cheque

  • Cheques can be issued against savings or current accounts
  • A cheque is always drawn on a specified banker
  • It is an unconditional order
  • The payee of a cheque is fixed and certain and cannot be changed
  • The payment will only be made in the name of the payee/beneficiary
  • It is an instrument that is payable on demand
  • A cheque will be considered invalid if does not contain the date


Steps to Write a Cheque

Step 1: The first step is to cross a cheque, which means to draw two lines, which are parallel to each other, on the left hand corner of the document.

Step 2: Write the date and write the name of the payee in the ‘Pay’ column. Proceed to write the amount in words and add ‘only’ in the end,

Step 3: And then write it in numbers followed by this symbol ‘/-.’

Step 4: Sign at the bottom of the cheque


What not to Do when writing a cheque

1. Never overwrite on a cheque leaf

2. Remember never to leave any kind of space between number or words on the leaf

3. Never leave any column blank on a cheque

4. Do not fold or staple a cheque

5. Sign clearly and always use the same signature


Number of Parties Involved with a Cheque

The number of parties that are involved with a cheque are as given below:

Payee: The person named in the cheque who is to receive the payment

Drawee: The specific bank on which the cheque has been drawn

Drawer: The person who writes the cheque, who can be the account holder or the customer. The payee and drawer can be the same person.

Endorser: When the right to take the payment is transferred by the payee to another party, the payee is called an endorser.

Endorsee: When the right to take the payment is transferred by the payee to another party, the party to which the right is transferred is called the endorsee.



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KIDIGITALI - Freelancing and Digital Marketing: What is a cheques - Definition and Types of Cheques
What is a cheques - Definition and Types of Cheques
Do you know what is a cheques? In this post, we are going to learn everything that you should know about cheques, the definition, and all types.
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