Final crossing of cheques....


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Final crossing of cheques....

  1. 1. Why is a Cheque used? • For commercial transactions, it is not always possible to carry huge amount of cash. • So they adopted an easiest way to carry huge amount of money, in a piece of paper (document), called cheque. • It is less risky and the danger of loss is minimized.
  2. 2. What is a Cheque? • A cheque is an agreement between two individuals or organizations to make a payment. • The banks have no involvement. • The extra instruction as limiting its negotiable. Essential Characteristics: • It is always drawn on a specified banker. • It is payable on demand. • It is an instrument in writing.
  3. 3. Essential Characteristics • Cheque has 3 parties involved: – Drawer – Drawee – Payee • A cheque should be duly dated and signed by the drawer. • ‟s name and amount payable to him should be clearly written. • It is always drawn on a specified banker. • It is payable on demand. • It is an instrument in writing.
  4. 4. Why Cheque is crossed? • 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 en cashed at the cash counter of a bank but it can only be credited to the payee's account. • Encashment at the counter of the bank is possible only in the case of an open cheque, i.e. a bearer cheque or an uncrossed cheque.
  5. 5. Contd… • The holder of a crossed cheque has to present the same to his bank for collecting its amount from the drawee bank. • When the amount of the cheque is collected, the account of the holder is credited. • Crossing, therefore, gives protection against payment of a cheque to wrong parties.
  6. 6. Cheque Clearance…
  7. 7. Types of Cheque: • • • • Open cheque Crossed cheque Bearer cheque Order cheque
  8. 8. Types of crossing: 1]General Crossing: A cheque is said to be crossed generally when it bears across its face any of the following: • Two transverse parallel lines. • “And Company” or “And Co”. • “& Company”. • “Not Negotiable”. • “Account Payee Only”.
  9. 9. General Crossing
  10. 10. Types of crossing: 2] Special Crossing: • It is a cheque in which the name of the bank is written between the two parallel lines and hence it can be paid to that specific banker only. • Special Crossing can never be converted to General Crossing. • In Special Crossing paying banker to honor the cheque only when it is presented through the bank mentioned in the crossing and no other bank. Such a cheque is crossed specially to that banker. • Special crossing, no such lines are necessary.
  11. 11. Special Crossing
  12. 12. Types of crossing: 3] Restrictive Crossing: • Restrictive Crossing is also called as Special Crossing. • This crossing can be made in both general and special crossing by adding the words “Account Payee”. • The effect of special crossing is that the bank makes payment only to the banker whose name is written in the crossing. • In this type of crossing the collecting banker is supposed to credit the amount of the cheque to the account of the payee only.
  13. 13. Restrictive Crossing
  14. 14. Types of crossing: 4] Not Negotiable Crossing: • „NOT NEGOTIABLE‟ does not mean not transferable. • It can be transferred like anyother cheque. • The word ‟NOT NEGOITABLE‟ can be added to general as well as special crossing • The transferee of such a crossed cheque cannot get a better title than that of a transferor (cannot become a holder in a due course) • The object of this type of crossing is to give protection to the owner of the cheque by preserving his rights against any subsequent holder.
  15. 15. Not Negotiable Crossing