You must have seen in a movie someone offering a blank cheque to seal a business deal? What is a blank cheque? When is a blank cheque issued and how to write a blank cheque?
Let’s find out.
Blank Cheque Meaning
A blank cheque is a cheque which is issued by the authorized signatory without mentioned any amount on it. This means that you sign the cheque but do not fill in the amount to be paid to the payee or the bearer (depending on the type of cheque).
When is a Blank Cheque Issued?
A blank cheque is basically issued where the issuer or the account holder gives full authority to the payee/bearer to withdraw/transfer any sum of money. So this means that is you have Rs 10 lakhs in your account and you write a blank cheque in favour of someone, they can withdraw some of it or all of those Rs 10 lakhs from your account and the bank will have to pay, as you have signed the cheque.
Blank Cheque: FAQs
A blank cheque can be any type of cheque issued by the account holder in favour of someone.
Yes. A blank cheque is valid only if the authorized person signs it. Without it, it’s just a piece of paper which has no value in a bank.
A blank cheque is valid 3 months from the date mentioned on it. If no date is mentioned, then the payee or bearer can add any date to it and use it within 3 months of that date.
No. You should write a blank cheque only in case of an emergency and in favour of someone you know and trust. Otherwise, you may lose all the money in your bank account.