Cheque

  A check is  a document you can issue to your bank, directing it to pay the specified sum mentioned in digits as well as words to the person whose name is borne on the cheque . Checks are also called negotiable instruments

Che

Central Government Act. Section 6 in The Negotiable Instruments Act, 1881.  ¹  [ 6 “Cheque”. — A “cheque” is  a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand  and it includes the electronic image of a truncated check and a check in the electronic form.

Features of a cheque

The amount specified is always certain and should be clearly mentioned both in figures and words. The payee of a cheque is always certain. A cheque is always payable on demand. The cheque should bear a date otherwise it is invalid and shall not be honored by the 1. Bearer Cheque

A bearer check is the one in which the payment is made to the person bearing or carrying the cheque. These checks are transferable by delivery, that is, if you are carrying the check to the bank, you can be issued the payment to. The banks need no other authorization from the issuer to be allowed to make the payment. 

How can you identify a bearer cheque? You know it is a bearer check when you see the words 'or bearer' printed on them. 

2. Order Cheque                                              

In these cheques, the words 'or bearer' are cancelled. Such checks can only be issued to the person whose name is mentioned on the cheque, and the bank will do its background check to authenticate the check bearer's identity before releasing the payment. 

3. Crossed Cheque

You may have observed checks with two sloping parallel lines with the words 'a/c payee' written on the top left. That is a crossed cheque. The lines ensure that irrespective of who presents the cheque, the payment will only be made to the individual whose name is written on the cheque, in other words, the a/c payee along with his/her account number. These checks are relatively safe because they can be encashed only at the drawee's bank. 

4. Open cheque

An open check is basically an uncrossed cheque. This check can be encashed at any bank, and the payment can be made to the person bearing the cheque. This check is transferable from the original payee (the original recipient of the payment) to another payee too. The issuer needs to put his signature on both the front and back of the cheque. 

5. Post-Dated Cheque

These types of checks bear a later date of being encashed. Even if the bearer presents this check to the bank immediately after getting it, the bank will only process the payment on the date mentioned in the cheque. This check stands valid past the mentioned date, but not before. 

6. Stale Cheque

A check past its validity, three months after the date of being issued, is called a stale check. 

7. Traveller's Cheque

Foreigners on vacations carry traveler's checks instead of carrying hard cash, which can be cumbersome. These checks are issued to them by one bank and can be encashed in the form of currency at a bank located in another location or country. Traveller's checks do not expire and can be used for future trips. 

8. Self Check

You can identify self checks by the word 'self' written in the drawee column. Self checks can only be drawn at the issuer's bank. 

9. Banker's Cheque

A bank is the issuer of these types of checks. The bank issues these checks on behalf of an account holder to make a remittance to another person in the same city. Here the specified amount is debited from the account of the customer, and then, the check is issued by the bank. This is the reason banker's checks are called non-negotiable instruments as there is no room for banks to dishonor these cheques. They are valid for three months. They can be revalidated provided specific conditions are met.