Cheque
In simple words, a cheque is a document through which you ask your banker to pay a specified amount of money to a person or a company (as you have instructed) by debiting your account. The cheque leaves are issued by the bank with special security features, which they can cross check to assure the genuineness of your instruction.
Types of cheque
- Bearer Cheque (Amount can be paid to anyone who has the cheque with him)
- Order Cheque (Only the person whose name is written can encash the cheque)
- Account payee cheque (This cannot be paid in cash, it has to be credited to the account of the person whose name is mentioned in the cheque, and so the transaction can be easily established)
- Crossed Cheque (This has to be credited to an account, but the details on whose account it has to be credited is not mentioned)
Cheque Truncation System
Recently RBI has introduced truncation of cheques. This is particularly beneficial for inter-bank transfer. Through this mechanism, an electronic image of the cheque is sent to the paying bank and they settle the transation through the image. This saves time and expenses as no longer is it required to send the physical cheques and this has eradicated the possibility of loss of cheque during transit.
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Cheques bouncing is one of the most common things heard about cheques in general… because it is an amount that you can pay by way of “IOU” more than anything. Nice to findout about the different forms of cheques.
BUT A bank cannot honour a cheque you give out unless there are sufficient funds in your chequing account. That’s why cheque truncation makes it easier for everyone!
Cheques are the most common method of transaction for any business, bill payment and even the school or collage fees. Like the credit and the debit cards it relives the individual of the cash. If the cheque is misplaced or lost the bank authority should be informed immediately. The bank issues the cheque book only to those clients with a specified deposit.