Cheques{meaning and types}


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Cheques{meaning and types}

  1. 1. PRESENTED BY M.Praveen
  2. 2.  Cheque is an important negotiable instrument which can be transferred by mere hand delivery.  Cheque is used to make safe and convenient payment  It is less risky and the danger of loss is minimised.
  3. 3.  "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."
  4. 4.  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.
  5. 5.  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).
  6. 6.  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.
  7. 7.  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.
  8. 8.  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 up to six months from the date of the cheque.
  9. 9.  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.
  10. 10.  If a cheque is presented for payment after six months from the date of the cheque it is called stale cheque.  A stale cheque is not honoured by the bank.
  11. 11.  The cheque which is an order upon a commercial bank by its client who has already deposited money with it is also called customers sight draft.
  12. 12.  These cheques are used where the drawer of the cheque is not trust worthy  . It is that cheque on which the payment is guarantee to the payee by the drawee bank.  When the cheque is presented to officer of the bank he writes certified or accepted on the face of the cheque  The cheque is honored whenever it is presented to the bank.
  13. 13.  It is drawn upon a bank by its own officer for meeting the expenses of the banks.
  14. 14.  A person who wants to transfer a certain sum of money may use bank money order.  The person has to pay the amount of the money order plus a bank fee and receives the registered cheque from the bank.  He then signs the cheque, fill in the name of the person and then forward the cheque to the payee.
  15. 15.  These cheques enables the tourists to meet the expenses of their trip.  These are not only acceptable by the issuing bank but also by the merchants and hotels inside and outside the country.  The procedure is simply to pay the bank amount of the order and the bank commission.  The bank will issue cheques on which the value is already printed.  The guarantor has to sign all the cheques issued in the presence of issuing banker.
  16. 16.  A draft is a cheque drawn by one bank upon another bank ordering to pay the payee.  Bank drafts are commonly used inside and outside the country for the transfer of money.  It has also helped in financing the foreign trade.
  17. 17. BY