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What Is Cheque?

The cornerstone of the banking sector and a crucial negotiable instrument in the nation is the Cheque. Each Cheque has a cheque number, an IFSC code, and a MICR.

Latest updates on Cheque

A few months ago, the Reserve Bank of India introduced the “positive pay scheme.” The new regulation states that if you are paying more than Rs. 50,000, you must double-check a few critical pieces of information related to the Cheque.

What Does a Positive Pay Scheme indicate?

Positive Pay is a technique that was developed to look for any fraudulent activity.

When a cheque is offered for clearing, specific information about it is compared to a list of checks you have previously issued to spot these fraudulent actions.

They include the payee’s name, the sum, the account number, the pay date, and the check number. Cheque leaves frequently have a MICR code, also known as Magnetic Ink Character Recognition (MICR), printed at the bottom. It speeds up the processing of cheque payments, minimises payment errors, and makes it simpler to recognise cheques.

The MICR system uses 9-digit codes, with the first three identifying the city, the following three the bank, and the last few the specific branch code.

To enable quicker and more efficient check processing, MICR codes on checks serve a crucial purpose.

In contrast, an IFSC code, printed on your check leaf, is also a vital part of the banking system.

This code aids in precisely identifying particular bank branches, enabling error-free and effective fund transfers between banks.

How to find the cheque number?

We frequently need a cheque number to follow the status of the cheque. One can recognise a cheque by its specific number, which is known as the cheque quantity. 

You can identify the cheque layout with the help of the following factors:

  • The check quantity is the six-digit amount inscribed in the check’s bottom left corner.
  • The magnetic connection character’s character code is known as the MICR. The 9-digit MICR code indicates the financial institution and department that issued the cheque. 
  • The first 3 digits are essentially the city code; the next 3 represent the financial institution code, and the final 3 represent the department.
  • The six digits listed in the cheque are part of the account quantity after the MICR code.
  • The transaction ID is the final 3 numbers at the bottom of a cheque. It clarifies whether the cheque is local or payable at par.

Note: Local checks can be cashed best at the banking institution that issued them, and cheques payable at par can be cashed in any department. The majority of cheques are payable using a central banking instrument.

Where on the cheque is the cheque number positioned?

The requirements for a cheque are always the same for all banks. The first 6 digits are cheque numbers, and the next 9 are MICR codes.

Note: It makes no difference if you have an account with the Punjab National Bank, ICICI, UCO, OBC, BOB, union, Canara, Yes, Dena, etc. the process remains the same.

Features of a Cheque

Cheques have a variety of properties, including:

  1. 1. Elements of writing: You need to write a cheque. The words alone do not represent any cheques.
  2. 2. Conditionless: The cheques are not requests; they are an order to pay. The request must be granted without conditions.
  3. 3. A banker must write the cheque: Typically, a specific banker draws it. A cheque may be drawn from a bank where the drawer has an account, a savings account, or a current account.
  4. The document must be dated and signed using the drawer: A cheque must be signed through the specific drawer to be valid. 
  5. A specific amount written on the cheque needs to be paid: The cheque must specify that only a specific amount is to be paid. If the cheque has any interest in doing anything but paying cash, it cannot be a cheque.
  6. Predictable timing: Cheques are generally valid for 6 months from the date printed on them. A stale cheque is what it is known as after that. A check that has been submitted or antedated is legitimate. In each situation, the date on the cheque is used as the start of the check’s validity.
  7. It is payable on demand: It is payable on demand: Although the terms “on-demand” or similar phrases shouldn’t be used, a check must pay a specific amount of money when called upon.
  8. 8. The drawer themselves can be the ones to get the check: Cheques may be payable to the drawer themselves. In contrast to an invoice or a pro-note, it may be payable to the bearer on demand.

Types of Cheques

  • Self-Cheques

A cheque drawn in the drawer’s name, making the payer and the drawer the same person, is referred to as a self-cheque.

On the cheque, the term “self” would be used in place of the drawee’s name. It may only be cashed in the drawer’s bank.

A self-cheque should be used if you need to withdraw money from your account. 

  • Blank Cheque

The term “blank cheque” refers to a cheque with all empty fields except the drawer’s signature.

  • Stale Cheque

In India, a cheque is good for 3 months from the date of issuance. Any cheque that has been deposited more than three months after the day it was signed is considered stale.

  • Ante-dated Cheque

If a cheque was written before the current date, it has an antedated date. For example, if the current date is 1 October 2022, but the date on the cheque is 1 December 2021, then it is an ante-dated cheque.

  • Account Payee Cheque

A bearer’s cheque marked “account payee” is one that has the words “account payee” inscribed on the top left side, between two parallel lines, and crossed twice.

A “crossed cheque” is another name for this. It is regarded as the safest method of issuing cheques because the money will only be sent to the account of the person whose name is on the check.

  • Banker’s Cheque

Banker’s cheques are those the bank issues as a guarantee of payment.

  • Crossed Cheque

An account payee cheque is another name for a crossed check. The words “account payee” are inscribed on the top left corner of the bearer’s check, encircled by two parallel lines.

The money will only be sent to the account listed on the cheque, making it the safest cheque to issue.

  • Multi-lated Cheque

A cheque is deemed mutilated if it arrives at the bank torn or in another way damaged. A cheque will no longer be valid if it is ripped or the critical information is hidden.

  • Bearer Cheque

A bearer cheque is given to a representative of the payee or beneficiary in whose favour it was issued as payment. The term “carrier” needs to be written in the leaf to process this kind of cheque.

  • Cancelled Cheque

Any cheque that has been crossed twice and the word “cancelled” put over it is considered to be a cancelled cheque. It serves as documentation that the person maintains a bank account. Other than this, the cheque does not require your signature or any other markings.

How to write a Cheque

Step 1:

The first step is to cross a cheque, which involves making two parallel lines on the left-hand corner of the paper.

Step 2:

In the “Pay” column, enter the date and the payee’s name. Continue to type the amount in words, adding the qualifier “only” at the end,

Step 3:

Using numbers and the slash (/-), format the answer.

Step 4:

Sign the cheque at the bottom.

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