A cheque is a written order directing a bank to pay a specific amount of money from the account holder’s account to a named person or entity. It serves as a form of payment and can be used for transactions instead of cash. The cheque must be signed by the account holder for it to be valid. Banks process cheques to transfer funds once they are presented for payment. Cheques are commonly used in business transactions or for personal payments.
What is Cheque Number?
A cheque number is a unique identifier printed on a cheque. It helps to distinguish each cheque from others in a cheque book. The number is typically located in the top right corner or bottom of the cheque. It helps in tracking and processing payments through a bank.
What is Cheque Class 10?
In Class 10, "Cheque" refers to a written order directing a bank to pay a specific amount from the drawer's account to the person named on the cheque. It is a negotiable instrument used for transferring money. The cheque must be signed by the drawer to be valid. There are different types of cheques, such as bearer and order cheques. It is commonly used for transactions where cash payments are not convenient or secure.
Characteristics of a Cheque
Below are the detailed characteristics of a cheque
Written Order: A cheque is a written instruction from the account holder (drawer) to the bank to pay a specific amount to a designated person or entity (payee).
Bank’s Role: The cheque is drawn on the drawer's bank account, and the bank is responsible for processing and clearing the payment upon presentation.
Payee Details: The cheque includes the name of the payee, which indicates who will receive the funds.
Amount in Words and Figures: The amount to be paid is written both in numeric figures and in words, ensuring clarity and reducing the risk of fraud.
Drawer’s Signature: The drawer signs the cheque, authorizing the transaction. This signature is vital for the cheque’s validity.
Date of Issue: The cheque includes the date on which it was issued. It may also have an expiry period, usually six months, after which it can no longer be presented for payment.
Cheque Number: Each cheque has a unique number that helps track and identify it in the bank’s records.
Bank Details: The cheque contains information about the drawer's bank, such as the branch name and account number.
Payment Instruction: The cheque serves as a formal instruction to the bank to transfer the specified amount of money from the drawer’s account to the payee, upon successful clearing.
What are the types of Cheques in India?
There are different types of cheques for various purposes, as shown in the table below:
Types of Cheques
Description
Open Cheque
A cheque that is payable to anyone who presents it, with no restrictions. It can be cashed or deposited by any account holder.
Depositing Cheque
A cheque that is deposited into the account of the payee or a third party, rather than being cashed.
Bearer Cheque
A cheque that is payable to the bearer, meaning anyone in possession of it can cash or deposit it.
Self-Cheques
A cheque is written by an individual to themselves for personal withdrawal or deposit into their account.
Post-dated Cheque
A cheque is written with a future date on it, meaning it cannot be cashed or deposited until that specified date.
Traveller's Cheque
A pre-printed cheque for a fixed amount, used for travel purposes, which can be cashed or exchanged in multiple locations worldwide.
Banker's Cheque
A cheque issued by a bank, guaranteeing payment to the payee, is typically used for large or important transactions.
Order Cheque
A cheque that is payable to a specific person or entity, who must endorse it to transfer it to another person.
Stale Cheque
A cheque that has not been presented for payment within the validity period, usually three months, is considered void.
Blank Cheque
A cheque that is signed but has no payee or amount specified, gives the holder the authority to fill in those details.
Dishonour of Cheque
When a cheque is not honored by the bank due to insufficient funds, incorrect details, or other reasons, it is invalid for payment.
Ante-dated Cheque
A cheque that is dated with a past date, making it invalid for processing until its stated date becomes valid.
Mutilated Cheque
A cheque that is torn, damaged, or otherwise altered, often requiring a replacement to be processed.
Crossed Cheque
A cheque with two parallel lines across the face, indicating it must be deposited into a bank account and cannot be cashed over the counter.
Key Elements of a Cheque
Below are the key elements of a Cheque:
Date: The date on which the cheque is issued. It helps determine when the cheque is valid for payment and can also affect its processing time (e.g., post-dated or stale cheques).
Payee Name: The individual or entity to whom the cheque is payable. This identifies who will receive the funds.
Amount (in numbers and words): The amount to be paid, written both numerically and in words. This serves as a verification method to prevent confusion or alteration.
Signature: The signature of the account holder (drawer) authorizing the payment. This confirms the legitimacy of the cheque.
Cheque Number: A unique serial number that helps track and identify the cheque, ensuring it’s not duplicated and assisting in record-keeping.
What is a Cheque Leaf?
A cheque leaf is a single page or sheet from a cheque book that contains a blank cheque. It typically includes spaces for the payer's details, payee's name, amount, and signature. Cheque leaves are used for making payments from a bank account. They are part of a series of cheques issued to the account holder.
Format of Cheque Leaf?
The format of a cheque leaf typically includes the following components:
Cheque Number: A unique identifier for the cheque (usually at the top-right corner).
Date: The date the cheque is issued, usually on the top-right or top-left.
Payee’s Name: The person or organization the cheque is issued to. This is written in the “Pay” field (usually in the middle of the cheque).
Amount in Words: The amount being paid, written out in words, placed below the payee’s name.
Amount in Figures: The numeric representation of the amount being paid, placed next to the payee’s name.
Account Number: The account number from which the cheque will be drawn. This is typically located at the bottom of the cheque.
Bank Name and Branch: The name and address of the bank that issues the cheque, located at the top-left or along the bottom of the cheque.
MICR Code: Magnetic Ink Character Recognition code, usually found at the bottom of the cheque. This helps in processing the cheque.
Signature Line: The area where the cheque writer signs to authorize the payment, is located at the bottom-right corner.
Cheque Type: Sometimes, a cheque may indicate if it’s a personal, business, or demand cheque. This can be written or implied depending on the cheque's design.
Bank’s Logo and Details: A logo or branding from the bank issuing the cheque, typically appearing at the top-left.
Crossing/Notes: A crossing line (either in parallel or with “Account Payee Only”) may appear in the center of the cheque for additional security or limitations on its use.
How to Write a Cheque?
Below are the steps for writing a cheque:
Cross the cheque – Draw two parallel lines in the top left corner.
Write the date and the person or company you are paying in the "Pay" field.
Write the amount in words and add the word "only" at the end.
Write the amount in numbers and end with "/-."
Sign your name at the bottom of the cheque.
Things to Know Before Writing a Cheque
Use Correct Information: Make sure the cheque has the right date, payee name, and the amount written clearly both in numbers and words.
Sufficient Funds: Ensure you have enough money in your account to cover the cheque, or it might bounce.
Signature: Sign the cheque exactly as it appears on your bank account records. An incorrect signature may cause issues.
Cheque Number and Account Details: Double-check the account number and sort code on the cheque to avoid mistakes in processing.
Keep a Record: Note down the cheque details (like the date, amount, and payee) in your cheque register or account statement to keep track of your spending.
