A cheque is a non-negotiable instrument which you can issue to your bank to pay a certain amount of money from your account to the person whose name is written on the cheque. Now let’s see what are the different types of cheques in India.
Different Types of Cheques
The following are the various types of cheques available in India:
Bearer’s Cheque
A bearer’s cheque is issued where the bank is directed to pay the mentioned amount to the bearer, i.e. the person having the cheque. In such cheques, the name of the payee is not mentioned.
Order Cheque
An order cheque is a cheque where the name of the payee is specifically mentioned on the cheque and only that person will be paid the sum of money given on the cheque.
Account Payee Cheque
An account payee cheque, as the name suggests, can only be used to pay the sum of money mentioned on the check to the payee’s bank account. Such cheques cannot be encashed.
Banker’s Cheque
As per the RBI definition, “Banker’s cheque is another payment instrument which is used by banks to settle payment obligations on behalf of their customers. This instrument is guaranteed by the bank for its full value and is similar to a demand draft.”
Post-Dated Cheque
Cheques which are issued at a later date are known as post-dated cheques. These cheques are usually used where future payments are to be committed now but the amount is payable only at the date mentioned in the cheque.
Stale Cheque
A stale cheque is a type of cheque which has crossed the validity, i.e. 3 months from the date mentioned on the cheque. A stale cheque cannot be cleared.
Crossed Cheque
A cheque which has two diagonal parallel lines drawn at the top-left corner of the cheque are known as a crossed cheque. A crossed cheque can only be used to pay the money to the person whose name is written as Payee (or Pay in favour of). A crossed cheque can only be encashed at the drawee’s (issuer) bank.
Open Cheque
A cheque which is not crossed with two sloping parallel lines is an open cheque. Such a cheque can be cashed at any bank and the amount promised can be paid to anyone bearing the cheque.
Blank Cheque
A blank cheque is a cheque that is not filled in with the specific details of the payment to be made. Instead, it is a cheque that has been signed and left blank.
Blank cheques are generally not recommended because they can be misused, and the account holder may not have control over the amount that is withdrawn from their account. Blank cheques can also be used for fraudulent activities, such as forgery, identity theft, or embezzlement.
Cancelled Cheque
A cancelled cheque is a cheque that has been marked as cancelled and cannot be used for any transactions. When a cheque is cancelled, it is usually marked with the word “CANCELLED” between two parallel lines drawn diagonally on the front of the cheque.
Cancelled cheques are often used for verification purposes, such as confirming bank account details, verifying the account holder’s identity, or setting up direct deposit or electronic fund transfer.
There is another type of cheque known as a Traveller’s Cheque. A traveller’s cheque is issued by your bank which can be used when you’re travelling abroad. Such cheques are pre-paid, i.e. the amount mentioned on the cheque is already withdrawn from your account and such cheque works just like cash. Only you can use your traveller’s cheque and these cheques do not expire, i.e. they have lifetime validity.
Also, read more articles related to Cheque:
Types of Cheques: FAQs
An account payee cheque is a type of cheque which can only be deposited by the person whose name is written as payee and the amount is directly credited to the payee’s account. It cannot be cashed.
No. A blank cheque is never advised. It is an open ticket to anyone who has it – to empty your account completely.
The 2 parallel crossed lines on a cheque mean that it is an account payee cheque. It cannot be cashed and can only be used by the payee whose name is written on the cheque.
