A cheque is a service or instrument supplied by a bank that allows you to pay money to anyone or any institution without having to withdraw cash from your account. It is an unconditional grant of mandate in which the person making the payment signs the document and orders the payment of a specified sum to any person or organisation.
Checks are bills of exchange drawn on a bank and not expressly stated to be payable other than on demand, and include the electronic image and an electronic copy of a truncated check, according to the legal definition ” according to the definition,” according to the definition.” says section 6 of the Indian Negotiable Instruments Act, 1881.
The drawer is the person who issues the check, and the drawee is the one who receives it. Another advantage of using a check is that you can make the payment at any time in the future. Let us now examine the various sorts of cheques utilized in the Indian financial sector.
Before going any further, it’s crucial to understand that checks are divided into distinct groups depending on various classification criteria. Each of them will be seen.
Location-based types of checks
Local Cheque: A local check is one that is cleared within City X itself. If someone gives you a check in your name, you must take it to the appropriate branch of the city; if you take the check out of the city and have it cleared, you will be charged individually.
- Cheques are classified according to their value.
Normal Value Cheques:
These are cheques with a value of less than one lakh rupees.
- Cheques with a value of more than one lakh are known as high-value cheques.
- Gift Cheques: Gift cheques are checks that are given as gifts to loved ones. If the check bounces, there will be no penalty or punishment.
Time-based types of checks
Future date pay Cheque: A future date pay Cheque is a crossed bearer Cheque with the future date written on it. This indicates that the cheque can be paid before or after the given date.
Back/Ante-dated Cheque: Before it is presented at the bank, this cheque bears a date. This check must be cashed within three months of the latest date on the check.
Called-out/stale check: You have three months from the date on the check to cash it. A stale cheque is one that has passed the expiration date and is not accepted by the bank.
Cheque types based on the payee
An open or bearer cheque is one that can be presented to a bank and exchanged for cash over the counter. There’s no need to hold your breath for Clarence. A person with an open check can go to the counter, show the man the money, and either cash it or transfer it. A co-Bearer check is one that can be cashed at the bank by any representative of the account holder.
While handing over the cheque, the representative is not required to sign the reverse of the cheque, and the withdrawal is completed just by handing over the cheque. These checks can also be problematic since if they are forgotten, anyone can cash them at the bank. How do you recognize a bearer check? When you see the words ‘or bearer’ printed on a check, you know it’s a bearer check.
A crossed cheque is written in the name of a specific person or organization, with two parallel lines drawn at the top left corner and the words “&CO” between them. “Account Payee” or “Not Negotiable” could be written or not. This cheque does not allow for cash withdrawals, and the funds must be transmitted to the named person or business.
The word “carrier” has been substituted with “order” on this cheque. Bearer cheque order cheques, on the other hand, can only be issued to the person whose name is inscribed on the cheque. Before releasing funds, the bank conducts verification to confirm the bearer’s identification.
A Self Cheque is one that is presented to the bank by the account holder for direct payment. The word “Self” is placed in place of the payee’s name.