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Different Types of Cheques in India : A cheque is a document issued by a bank and is used to pay a specific amount of money from the account of one person to another person in whose name the specific cheque has been issued. The person who writes the cheque i.e., the drawer writes the all the details on the cheque including the amount, date, and payee name and signs it. Thus ordering the bank of the drawer, called the drawee, to pay that person or company the amount of money as mentioned. Today, we will tell you all the details about various types of cheques and their uses.
A Cheque must have the following important details :-
- A Cheque Drawn upon a specified bank (Drawee).
- A Cheque should be signed by the Account Holder (Drawer) issuing the Cheque.
- A Cheque must have Payee Name on it.
- A Cheque must mention the Amount in words as well as figures.
- A Cheque must have a date on it.
4 Main Types of Cheques in India
A cheque is undoubtedly one of the best and safest modes of making payment. Let us know about the 4 main types of cheques.
1. Open Cheque
With an open cheque, the cheque holder can get cash by presenting the cheque at the cash counter of the bank. The person holding the open cheque can either receive the payment at the counter of the bank, deposit the cheque in his/her account or give it to someone else by putting a signature at the back of the cheque.
2. Bearer Cheque
A cheque which is payable the person who presents it for payment at the cash counter of the bank is known as ‘Bearer cheque’. A bearer cheque can be transferred just by delivery and does not require any endorsement.
3. Order Cheque
Order Cheque is a cheque which is payable to only a particular person. In such type of cheque the word ‘bearer’ must be cut out or cancelled and instead of it the word ‘order’ should be written. An order cheque can be transferred by the Payee to other person by signing his or her name at the reverse side of it.
4. Crossed Cheque
With a Crossed Cheque, the cheque holder cannot encash it at the cash counter of the bank. The payment of a Crossed Cheque can only be credited to the bank account of the payee. A normal Cheque can be made a Crossed cheque by drawing two parallel lines across top left corner of the cheque. This can be done with or without writing ‘Account payee’ in the space between the two parallel lines.
Although the cheques are mainly of 4 types. However, they can further be classified as the cheques which guarantee payments, cheques based on the location, cheques based on its value.
Cheques which Guarantee Payments
There are few types of cheques that guarantee payments, they are :-
1. Self Cheque
A Self Cheque is a cheque which has Self or Yourself written on it by the account holder. This cheque is used to receive cash from his account. This can be used as an alternative to an ATM card.
2. Post-dated Cheque (PDC)
A PDC or a Post-dated Cheque is a type of a crossed or account payee bearer cheque but is post-dated and can be presented on a future date. This cheque is valid from its date of issue to 3 months.
3. Banker’s Cheque
A Cheque which issued by a bank to withdraw money from its own funds rather than drawing it from an account is called Banker’s Cheque. Banker’s cheque is can only be issued after the bank successfully verifies the account status of the person requesting and the amount is deducted immediately from the customer’s bank account. A banker’s cheque in any case cannot be dishonored or bounce like in case of normal cheque, when there are insufficient funds in the account.
4. Traveller’s Cheque
It is a printed and open cheque which is issued as an alternative of carrying around money while visiting abroad or on travelling to a foreign country. These cheques come with a replacement guarantee and validity of lifetime. Traveler’s cheques are accepted globally by merchants, restaurants and various recreational organizations. The unused cheques from from one trip can be used for your another trip in future.
Cheques based on the Location
There are few types of cheques that are based on the location, they are :-
1. Local Cheque
It is a cheque issued by a bank within the same city as the payee.
2. Outstation Cheques
If a local cheque issued from a city is presented in another city it is known as an outstation cheque and may be charged with nominal but fixed banking charges.
3. At Par Cheque
At Par Cheque is a Cheque that is accepted at all the branches of the bank within the country. It can be present across the country without giving an additional banking charge, as in case of an outstation cheque.
Cheques Based on its Value
There are few types of cheques that are based on its value, they are :-
1. Normal Value Cheque
Any Cheque which is below the amount of Rs. 1 lakh is known as a normal value cheque.
2. High Value Cheque
A Cheque which bears an amount which is higher than Rs. 1 lakh is known as a high value cheque.
3. Gift Cheque
A Cheque which is used for gifting money to loved ones is known as a gift cheque. The value of the cheque may vary from Rs. 100 to Rs. 10,000.
Final Words :
Hope you now know about the various types of Cheques and their uses. Although, you may not use all types of cheques, however it is a good to know information.
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