Cross cheques concentrate on the instruction that is given by the drawer of the specific cheque to the drawee bank. The instruction requires to pay the cheque at the counter of the bank, with a strict direction to pay it to a person that gives it through a banker. Blank cheques and mishandled bearer cheques can lead to fraud or unauthorized withdrawals, making it imperative for people to handle cheques responsibly. Older paper cheques that do not adhere to the standardized format required for electronic processing are known as non-CTS (Cheque Truncation System) cheques.
The main reason to use the provision of a crossed cheque is its low-risk factor. The following points explain how a crossed cheque is a safer means of transaction as compared to an open cheque. How many types of cheques are in use depends on elements like who is the issuer and who is the drawee. Based on these essentials, we explore the different types of cheques in India. A cheque 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.
- It simply means that the particular cheque could only be deposited straightway into a bank account and would not be instantly cashed by a bank or by any credit institution.
- In these cases, the respective restrictions mandate to pay the cheque through State Bank of India (acting as collecting banker) only.
- In this sort of cheque crossover, the cheque must include the phrase ‘not negotiable.
- In layman’s words, a cheque is a vital document that each individual, company, or government uses to trade various amounts of cash.
- From above image, you notice how to change the normal cheque leaf into crossed cheque.
The open cheque, also known as the bearer cheque, is used for transactions that take place over the counter. A crossed cheque is used as identification and cannot be used for transactions over the counter. The check can be crossed in a variety of ways, each with its own set of consequences. A crossed cheque can only be deposited into the payee’s account. In case this cheque is misplaced, lost, or stolen it cannot be misused. It can create problems for the payee if the individual needs to access the cash quickly for any reason.
Various Ways to Cross a Cheque
In this comprehensive exploration of cheques, we have journeyed through time, examining the various types, unraveling their common uses, and uncovering the myriad benefits they offer. As we now conclude this journey, it becomes abundantly clear that cheques, despite the relentless march of the digital age, have not lost their relevance or significance in the world of finance. When a cheque remains with the payee for a long time, and as a result cannot be honoured by the bank; then such cheque is termed a stale cheque.
This documentation can be useful for financial professionals and tax purposes. An anti-dated cheque is one that carries an earlier date and can only be cashed by the payee after the date. A crossed cheque is defined as a cheque that is crossed via two parallel lines from top through bottom, or left to right.
The importance of this type of crossing highlights that the cheque is not negotiable anymore. In simple words, a cheque is tagged as a critical document that could be used by an individual, organization, or government for the transaction of varied fund values. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. In British English, a piece of paper like this is called a bill. In summary, an stale cheque bears a date in the past that cannot be honoured by the bank.
It is generally best to place it in the upper left corner of the cheque. The importance of this crossover is that the cheque payment can only be issued by a banker. You notice that along with crossing two lines at the corner you also need to write as “A/C Payee Only”. So in the above example, the cheque must be encashed by depositing to payee account (In the above example it is in my name). This makes secure payment to payee only, but any other third parties. So drawer is giving instruction to drawee to pay an amount mentioned on the checque to the person named or to the bearer of the checque.
Please read on the advantages and disadvantages of cheques here. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Stay informed and empowered with our latest updates, your source for navigating the ever-changing legal landscape. Copyright © document.write(new Date().getFullYear());, All rights reserved.
Account Payee Crossing
Moreover, the cheque is non-transferable, which implies that one cannot deliver it to a third party. Nevertheless, only the payee has permission to place the cheque in a bank in their https://1investing.in/ own name. In this sort of cheque crossover, the cheque must include the phrase ‘not negotiable. Furthermore, you should also cross the cheque in either specific or generic methods.
Types of Cheque Crossing – Introduction
Therefore, in simple words, you may say that a person who holds the bank account and who sign on cheque is called the drawer. An open cheque does not have any crossing marks on its face and is generally issued to the bearer. The bearer holds the authority to redeem the cheque or simply cash it. Therefore, it is not a safe means of making a transaction, when compared to a crossed cheque. Crossed checks are predominantly used in Mexico, Australia, and several European and Asian countries. They signal specific instructions to a financial institution regarding how the funds may be handled.
Normally, a proof of identity is not required to cash a bearer cheque. However, in a situation where a huge amount of money is to be cashed, a form of identification may be required. If a bearer cheque is lost, the payee will not be able to cash the cheque. After this time, it turns crossed cheque image old, and the consignee bank may refuse to make the payment. Nevertheless, if the cheques have now become old owing to the expiration of the validity, the writer can re-validate them. If you understand what a cross cheque is, you can see that the payee cannot claim the cheque.
Paper cheques can take several days to clear, delaying access to funds compared to electronic payment methods like online banking and mobile banking. For Special Crossing cheques, there is a requirement for the name of the banking institution to be mentioned on the cheque. This form of crossing has the consequence of funding the cheque exclusively to the intended recipient. It serves as a reminder to everyone that you can never convert an ordinary crossing into a special crossing. The most basic method of crossing is to draw two parallel lines across the cheque’s face. This is referred to as “General Crossing.” In most cases, a crossed check will be paid to any bank to which it is presented.
A cheque with such a crossing can only be paid into an account at that bank. The beneficiary bank can add an additional crossing to allow another bank, who are acting as their agent in collecting payment on cheques, to be paid the cheque on their behalf. In these cases, the respective restrictions mandate to pay the cheque through State Bank of India (acting as collecting banker) only. Cheque transactions often include three participants, and the drawer is the individual responsible for the accounts and has the power to write and sign cheques. The drawer instructs institutions to transfer a specific sum of money to a specific individual or the holder of the cheque. In other terms, the drawer is the individual who controls the savings account and signs the cheque.
A deposited check can take days to clear depending on the country and the banking institution, and crossed checks can only be deposited. A crossed check can safeguard against fraud if it falls into the wrong hands because it can’t be immediately cashed. Anyone who’s stolen the check creates a line of evidence pointing to their identity when they deposit it into an account that they have access to. This can be particularly advantageous if the check is written for a large amount of money. This cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. This cheque is transferable from the original payee (the original recipient of the payment) to another payee too.
Cheque: Types of Cheque
A crossed cheque is primarily any cheque that is crossed with two parallel lines. The lines could be drawn either across the whole cheque or with the top left-handed corner. In British English, a cheque is a printed form on which you write an amount of money and say who it is to be paid to. People use post-dated cheques to agree on payment dates that align with their financial situation, providing flexibility and assurance in transactions.