Guidelines for Writing a Cheque
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If not written properly, cheques may be rejected or dishonored by the bank.
Thus for handling a cheque, we must be familiar with all its components including the parties involved and the process of writing it.
A ‘cheque’ directs the banks to transfer money from one account to another. In cheque-based transactions all parties are equally important.
These parties are-
A person who issues the cheques and holds the bank account is called the ‘Drawer’
‘Drawee’ is indicative of the financial institution
‘Payee’ is the person who will receive the funds; his name can be seen on the cheque.
A cheque is valid for three months. On the other hand, using post-dated cheques, we can carry out transactions within the time frame.
The Parts of a Cheque
- A cheque carries name of the bank, its address
- IFSC
- Mention the name of the payee properly
- Date box
- A section for the drawer to write the amount in words
- Account number should be written down
- A signature by the drawer in the designated space for signature is a must
- Mention the amount to be transferred
- Each cheque has a unique chess number, MICR code
- The drawer must specify the amount to be transferred in number in the box provided for the same
This is how a cheque looks like-
Writing a Cheque
If not written properly, a cheque can easily get rejected by the banks.
Simple steps for writing a cheque:
- Strictly follow the “DD/MM/YYYY“ format while writing the date at the top right-hand corner of the cheque. Post-dated cheques can also be created if required.
- Make sure that the ‘Payee’s’ name is written correctly
- In the space designated for ‘Rupees’, write the amount in words. Never forget to add ‘only’ after writing the full amount. This will prevent the cheque from getting tampered. If the total is 3003, write it as “three thousand and four only.”
- The next step is to write the amount in numerals in the space provided for the same. Write the amount in the format “3003/-”
- Be careful while signing the cheques. Wrong signatures or mismatch in signatures can make the cheque invalid.
Things to remember while writing a Cheque
If not written properly, a cheque can easily get rejected by the banks.
Simple steps for writing a cheque:
- Strictly follow the “DD/MM/YYYY“ format while writing the date at the top right-hand corner of the cheque. Post-dated cheques can also be created if required.
- Make sure that the ‘Payee’s’ name is written correctly
- In the space designated for ‘Rupees’, write the amount in words. Never forget to add ‘only’ after writing the full amount. This will prevent the cheque from getting tampered. If the total is 3003, write it as “three thousand and four only.”
- The next step is to write the amount in numerals in the space provided for the same. Write the amount in the format “3003/-”
- Be careful while signing the cheques. Wrong signatures or mismatch in signatures can make the cheque invalid.
Types of cheques
Order Cheque
An order cheque allows only the payee to receive the amount. No one else is permitted to encash the cheque by law. The word “bearer” will be removed from order cheques. Banks verify “order cheques” thoroughly.
Bearer cheques
It can be cashed by either the payee or the person who gives it to the bank. In the case of bearer cheques, it is not important to identify the person who encashes the amount. Such “cheques” can be transferred by post from one person to another.
Open cheques
If a cheque is not uncrossed, then it becomes an open cheque. A drawee is allowed to transfer an open cheque to another person by simply writing his/her name on the cheque. A payee is required to sign the backside of the cheque, when he/she receives it.
Crossed cheque
In a crossed cheque, the issuer will draw two parallel transverse lines at the top left corner of the cheque. Due to the lines, no other person will be able to obtain the cheque. Such kind of cheques reduce the risk of money being received by unauthorized people. In the case of a crossed cheque, the amount can be cashed only through a payee’s bank.
Post dated cheque
Post-dated cheques are those cheques which will bear a later date than the date of the issue. The amount, in this case, will not be transferred to the payee until the specified date is met. The cheques have a validity of three months.
Blank cheque
In the case of a blank cheque, the drawer only signs the cheque and leaves the remaining columns blank. The drawee can add the amount of his/her “liking” on the cheque. A blank cheque showcases the level of trust among the parties.
Gift cheques
Rather than giving hard cash to the receiver, a specific amount is given in the form of a gift cheque. Mostly issued in decorative form, there is no limit to the number of gift cheques that can be purchased.
Bankers cheque
Banks issue the cheques on behalf of their customers. In this case, the bank has to pay a certain amount of money to the payee within the city. They are printed prior and are not negotiable. Such cheques have a validity of three months. (can be revalidated with legal help)
Stale cheques
In the case of a stale cheque, the amount shall be encashed within three months. Stale cheques have a written date that exceeds the validity period.
Traveler’s cheque
Such cheques are accepted everywhere. Banks issue such cheques for the remittance of money from one location to another.
Self cheques
A self cheque is issued by the drawer himself. Used only when the drawer wishes to withdraw an amount from his/her bank account. Should be handled carefully.
Mutilated cheques
Cheques that are torn are called mutilated cheques. Banks won’t process torn cheque payments without taking confirmation from the drawer.
In the case of mutilated cheques, banks make the final call!
The article intends to throw light on the steps to follow while writing a cheque. We have also discussed the different types of cheques available.
Check your knowledge
There are three parties involved in a cheque transaction. The drawer, the drawee, and the payee.
While payee is the person/organization which receives the cheque, a drawee is a person or organization that issues the cheque.
Such cheques can be processed by writing ‘self’ on the cheque, in case you want to withdraw money from your bank account.