A cheque book is issued by the bank when a current account is opened. A cheque
is a written order given to the bank by the current account holder in order to pay a
certain amount of money to the individual whose name is written on the cheque or
to the bearer of the cheque.
There are three major parties involved in the transactions related to cheques.
They are,
1. Drawer – The drawer is the person who writes and signs a cheque. Generally,
the drawer is the current account holder.
2. Drawee – It is the bank of the drawer. The drawee is the bank in which the
current account is maintained.
3. Payee – The person whose name is written on the cheque and has the right
to receive the payment mentioned in the cheque is the payee.
Writing a cheque
A cheque is a legal document which can be used instead of cash when settling
transactions.
Accordingly, the following are some important facts to be considered when
writing a cheque.
01. Writing the date accurately.
02. Writing the name of the payee clearly and accurately.
03. Writing the value accurately both in figures and letters.
04. Signing the cheque accurately by the drawer.
05. If there are any corrections to be made on a cheque, those should be
written clearly and be certified by the full signature of the drawer.
06. Writing the relevant information on the cheque counter foil.
07. Not writing anything on the Magnetic Ink Character Recognition space
of the cheque.
08. Crossing appropriately
The counter foil is the part that remains in the cheque book when a cheque is issued.
The details of the transaction should be included here. The counter foil is the part
which is linked to the above specimen cheque in a broken line. If there are any
corrections made on a cheque, those should be mentioned on the counter foil as
well.
Today, the cheques issued by every commercial bank have a Magnetic Ink Character
Recognition space. The following numbers are printed respectively on this space.
- Cheque number
- Bank number
- Bank branch number
- Bank account number
Crossing a cheque
Crossing a cheque means drawing two parallel lines on the face of a cheque.
Writing the name of a bank inside the two parallel lines or even without parallel
lines is also considered as crossing. A cheque is crossed in order to provide more
security for that cheque. Then, it cannot be encashed over the counter of a bank.
Crossed cheque should be deposited to a bank account in order to obtain the money.
Therefore, crossing a cheque ensures that the amount mentioned in the cheque will
be given to the relevant person only.
A cheque can be crossed in two ways.
1. General crossing
2. Special crossing
General crossing
A general crossing is done by drawing two parallel lines on the face of a cheque with
or without including a condition inside. The general crossing can be done in several
ways. The following are some examples for commonly used general crossings.
Special crossing
A special crossing is a crossing mentioning a name of a commercial bank written
on the face of a cheque inside two parallel lines or without parallel lines. It can be
done in the following ways.
A cheque crossed in this way requires to be deposited in an account in the named
bank in the crossing.
Endorsing a cheque
Endorsing a cheque means writing the name of the payee, as mentioned on the face
of the cheque, at the back of it by the hand writing of the payee himself. A cheque
can be endorsed when a businessman transfers a cheque that he has received to
another party for a transaction or when depositing a cheque into a bank account.
Endorsing a cheque ensures that a person has the true title for that cheque.
