Cheque

         A cheque is a bill of exchange in which one party orders the bank to transfer the money to the bank account of another party. It is a negotiable instrument that is covered under the Negotiable Instruments Act, 1881. There are three parties involved in the transaction – the drawer is the person who writes the cheque, the drawee is the bank that has to transfer the funds and the payee is the person in whose name the cheque has been issued. A cheque can be issued against a savings account or a current account.

Types of Cheques

• Bearer Cheque: This type of cheque is payable to the person who presents it to the bank for payment. It does not require any identification, and anyone can cash it.
• Order Cheque: An order cheque is payable only to the person named on the cheque. The payee must endorse the cheque by signing the back of it before depositing or cashing it.
• Crossed Cheque: A crossed cheque has two parallel lines across its face. This provides additional security against fraud and theft.
• Post-Dated Cheque: A post-dated cheque has a future date on it, and it cannot be cashed until that date arrives. This type of cheque is commonly used for payments that are scheduled in the future, such as rent or loan repayments.
• Traveller’s Cheque: A traveller’s cheque is a type of cheque that can be used as a form of payment when travelling. They are issued by banks or other financial institutions and can be replaced if lost or stolen.
• Self Cheque: A self-cheque is a cheque that is written by the account holder to themselves.

Validity of a cheque

       A cheque is valid for a period of 3 months after the date of issue of cheque (the date is indicated on the top right-hand corner of the cheque).