Banker’s Cheque

A banker’s cheque is a type of cheque which is issued by your bank on your behalf to be paid to the payee. The Banker’s Cheque is also known as Pay Order in India. Let’s find out more about a banker’s cheque.

What is a Banker’s Cheque?

A banker’s cheque is a type of payment instrument in India. This is a type of cheque which you, as an individual, cannot issue. This is used only by the banks to make payments on behalf of their customers. A Banker’s cheque is payable only at the branch of issue and is used for payments within the local clearing jurisdiction.

Source: RBI

Banker’s Cheque Validity

Just like any other type of cheque, a banker’s cheque is also valid for 3 months from the date of issued. However, the validity of a banker’s cheque may be increased upon providing the same in writing at the issuing branch. Earlier it used to be 6 months but RBI reduced this period to 3 months on 1^st April 2012.

Difference between Banker’s Cheque and Demand Draft

Although, a banker’s cheque and a demand draft both have similar functions and features, there is one major difference between the two:

A demand draft can be deposited at any branch of the issuing bank whereas in case of a banker’s cheque, it is not the case. A Banker’s Cheque can only be deposited at the issuing branch and nowhere else.

Both the instruments are the safest form of making payments offline and without cash. There is no chance of a banker’s cheque being bounced as the amount is already deducted from the issuer’s account and the same applies to a demand draft as well. 

How to Deposit a Banker’s Cheque?

To deposit a banker’s cheque, the payee needs to visit the issue branch, i.e. the branch at which the cheque was initially issued. Then present the cheque at the counter and present your ID as well. Once your ID is checked by the banker, you are required to sign a declaration in the bank’s register that you have received the amount. And that’s how you deposit a banker’s cheque.

Banker’s Cheque: FAQs