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Bearer Cheque

Assume you need to transfer money to someone immediately but cannot hand it over or go to the bank to withdraw it. You may be worried about how to handle the situation, particularly if the sum is significant.

Under those conditions, a bearer cheque can help you get through the situation.

However, you may have questions about what it is and how to use it. Read this article to learn more about bearer cheques.

What is a Bearer Cheque?

A bearer cheque is a cheque you could use to make a bank pay a cash bearer or a carrier the amount of money specified in the cheque.

Contrary to a cancelled and stale cheque that prevents you from withdrawing or going out of expiry, a bearer cheque is the only cheque that makes withdrawal extremely smooth.

What makes it different from the other kinds of cheques?

The below-mentioned characteristics of a bearer cheque make it different from the other cheques:

If you hold a bearer cheque in hand, you can obtain funds from a bank without difficulty.
Unlike an order cheque, you do not need the account holder’s authorisation to get the payment. As you know, an order cheque has the ‘Or Order’ written, whereas a bearer cheque has the word ‘Or Bearer’.
You can transfer the cheque through simple delivery. The bank will pay you if you bring the cheque to the bank.

However, you need to look out for

The cheque getting stolen- in this case, you will lose the amount stated on the cheque.
Never leave any space between the Words, Rupees, or Pay column, as fraudsters get a chance to commit fraud.

Consequently, remember to know the different types of cheques whenever you deal with cheques.

Before you hand it over, the primary thing you need to take care of is writing such a cheque and following all the necessary rules.

How to Write a Bearer Cheque

Similar to the rules of writing the other cheques, you must follow the below ground rules:

Write the date on the cheque always.
Do not forget to add the word” only” after stating the amount in words and digits.
Use a backslash (/) after writing the amount in digits.
Use the word “Self” or ‘pay to the order of cash” in the space provided in the cheque.
Complete the process by signing above the words “Authorised signatory” before handing it over to the bearer.

What Are the Things to Remember Before Carrying a Bearer Cheque?

If you are a bearer, keep in mind the following:

Although there is no rule requiring the signature of the cheque holder at the time of encashment, for security reasons, the bank requires the bearer to sign the back of the cheque. They ask for this in the presence of the cashier to confirm receiving funds from the bank.
The bank does not need to take precautions to determine the loyalty of the payee’s ownership. Nonetheless, the bank does not require bearer identification, but if the amount is significant, the bank may require identification.

Bearer Cheque Limits

There is no limit on the bearer cheque. However, it is always safe to avoid making large amounts of payment through a bearer. The bank can have an identification process for the bearer if they find the person suspicious.

Which is Better, the Bearer or the Order Cheque?

Comparison Based On	The Bearer Cheque	The Order Cheque
Meaning	A bearer cheque is payable to any person who carries and presents the cheque at the bank.	An order cheque is payable when the only person named on it presents it at the bank’s counter.
Identification	You will find the word’ bearer’ at the end of the payee’s name.	You will find the word’ order’ at the end of the payee’s name.
Encashment	Any person can encash the cheque, and any person holding or carrying the cheque	Only the payee, or as per his order, can the cheque be encashed.
Transferred through	Simple delivery	Proper endorsement
Receipt	The recipient’s signature acts as a receipt.	The signature of the payee on the cheque is an endorsement.
A Banker’s Responsibility for fund payment to the wrong person	No responsibility of the banker or drawee	Responsibility to the banker or drawee
Conversion	The bearer can convert a bearer cheque into an order one.	The bearer cannot convert an order cheque into a bearer one.

Note: Overall, it is impossible to predict which cheque is superior. You can determine them by the business’s nature and the cheque’s purpose.

What is the Validity of a Bearer Cheque?

According to the Reserve Bank of India, a bearer cheque has a three-month validity period. After three months, the cheque becomes stale, the same as a dead cheque in that it is no longer valid. Therefore, banks will not accept such checks.

On the other hand, a post-dated cheque allows you to make a withdrawal at a future date, but only after that date, not before.

How is Cash Payment of Bearer Cheques Accomplished?

Banks must pay the person in whose name the drawer draws the cheque. Therefore, banks need the bearer to sign the back of the cheque. The sign would prove that the bank received the amount written. The activity reduces cheque fraud and sharp practices.

What Are the Advantages of Bearer Cheques?

The entire process is straightforward.
No transaction records are maintained.
No identification is required for the bearer unless the bank is suspicious.
Bearer Cheque is easy to negotiate because it does not require the approval of the negotiation.
You can easily convert anonymous checks to order cheques.
It helps make a small payment.

You should have a basic understanding of a bearer cheque by now. The best part about these cheques is that banks do not require authorisation from the account holder or the issuer before paying the bearer if the bearer has the necessary documents, such as identification.

If you handle a lot of monthly transactions, try to stay on top of new ways to do so. And remember that you can always get more banking information from on myBillBook.

FAQs on bearer cheque

When is an order cheque considered a bearer cheque?

If you do not see the word 'bearer' cancelled while issuing the cheque, it is considered a bearer cheque.

Who has the authority to withdraw a bearer cheque?

If the cheque is a 'Bearer' or 'Self' cheque, the bank has no authority to require the account holder's presence unless time is of the essence. Suppose the person presenting the bearer's check in the bank has no address or identity proof. In that case, the bank can only make payments above Rs. 50000 with the bank manager's permission.

How do I withdraw funds from a bearer cheque?

You can withdraw funds by carrying a bearer cheque to the concerned bank and handing it over. You will have to sign the back side of the cheque to receive the amount.

How many signatures does a bearer cheque require?

Only one. The signature of the payee.

Can a bearer check be deposited into an account?

Cross the upper left corner of the bearer cheque and deposit it in the account with the name written to convert it to an account payee. You cannot deposit the cheque into another account if you have already written "self" on it. You must first withdraw the funds and deposit cash into the account you wish to deposit.

Why do we write the bearer check?

You can write a bearer cheque if you want someone else to carry the cheque and withdraw the amount specified from the bank easily.

What exactly is the bearer's signature?

The bearer’s signature means the signature of the person carrying the cheque to the bank.

Who is the bank's bearer?

The bearer is anyone who presents a negotiable document to a bank to receive a payment.