Types of Cheques, Crossing of Cheques

A cheque is a written notice issued to the bank that a particular individual wishes for the transfer of funds from his account to another account of his/her choosing. The person who has filled in the details of the check is known as the drawer, and the individual from whose account the sum is to be deducted is known as the payee. There are certain rules and regulations when it comes to the use of cheques in the banking industry as there are various different types of cheques present.  

Types of cheques

• Order cheque

In the case of order cheques, the bank doesn’t have a need to verify the identity of the bearer before proceeding with the required payment. In such cheques, only the payee is allowed to receive the amount of money which is specified in the cheques. The ‘or bearer’ mark on the cheque is struck off in order for cheques to ensure only the payee receives the amount specified in the cheque.  

• Bearer cheque

Bearer cheques are the most common types of cheques seen around the globe. In such cheques, the bearer of the cheque is allowed to encash the cheque at banks or other financial institutions. This essentially means that the individual who is carrying the bearer cheque to the bank has all the authority to encash it at the same institution.  

• Stale cheque

A stale cheque is a cheque that is not valid anymore or has expired. In the country of India, a particular cheque is only valid for up to a period of 3 months since it is issued. When the period of 90 days has passed, the cheque is referred to as a stale cheque.  

• Crossed cheque

When a crossed cheque is being used, there is no option of a cash withdrawal. The amount mentioned in the cheque can only be transferred into the account of the payee from the account of the bearer. Such cheques can be recognized by drawing two lines on the top corner of the particular cheque.  

• Post-dated cheque

In post-dated cheques, the date present is later than the original date that the cheque was issued. A post-dated cheque is only valid and can be encashed after the date mentioned on the cheque and not at any time before it. Such cheques, when submitted to banks before the date mentioned on the cheque, are not processed until the date is finally reached.  

Crossing of cheques

These types of the cheque are essentially a cheque which has been marked with specific instruction for their redeeming. Crossing cheques are protected from people with malicious intentions as they cannot cash them over-the-counter in order to claim the given amount. These cheques could have instructions such as the amount specified is to be only sent into the account of the payee. There are various types of crossing cheques. Some of them are:  

• General crossing

In general crossing cheques, there is the presence of two parallel lines present on the top corner of the document. The parallel lines indicate the cheque to be crossed, and hence the amount cannot be cashed over the counter but could only be received in the account of the payee mentioned in the document itself.  

• Not negotiable

The words ‘not negotiable’ when added to a cheque turns it into a not negotiable crossing cheque. The words make the cheque not transferable to any third party.  

• Amount payee

Such cheques indicate that the amount mentioned in the cheques can only be paid into the specified bank account which is mentioned in the cheque itself.  

Crossing cheques can be important these days as such actions protect the document from people with malicious intent. There are many types of crossing cheques present. Cheques have been a very useful invention, allowing people to shift funds from their bank accounts in a safe and effective manner.  

Conclusion

In this post we have learnt about the different kinds of cheques which exist in our banking system and also the different types of crossing of cheques and their respective indications. Study this topic properly as it is a very common topic given in the banking exams.