How to pay in a cheque?
A cheque is a financial document that orders a bank to pay a particular amount of money from a person’s account to another individual’s or company’s account in whose name the cheque has been made or issued. The cheque is utilised to make safe, secure, and convenient payments. It serves as a secure option since hard cash is not involved during the transfer process; hence the fear of loss or theft is minimised.
A cheque may be issued against a current account or a savings account. Every bank cheque has a cheque number, MICR and IFSC code. Under this mode of fund transfer, there are three parties involved in the on-track movement of money through a written paper source.
There are three parties to cheque –
Apart from the above mentioned parties, there are two more parties to a cheque:
Sometimes, the drawer and the payee can be the same person, when the drawer writes a self-cheque.
Read in detail: Types of Cheque
To cancel cheque leaves, you just need to strike two lines across the cheque and write the word “CANCELLED” across it. You don’t need to sign the cancelled cheque. It only works as proof that you have an account in the bank. There is the account holder’s name, branch name and address, account number, and MICR code on the cheque which is enough to submit as proof.
As all the primary details of your bank account are present in a cancelled cheque, it helps a verifier/auditor to confirm these details of yours. Moreover, a Cancelled Cheque doesn’t necessarily require your signature on it, so there aren’t any security issues which you should be concerned about when you submit your bank cheque as proof of your financial identity.
A crossed cheque is any cheque which is crossed with two parallel lines. The lines can be drawn either across the whole cheque or through the top left-hand corner. What does it signify? It simply means that the specific cheque can only be deposited straightway into a bank account and cannot be instantly encashed by a bank or any credit institution. This ensures a level of security to the payer since it requires the funds to be handled through a collecting bank.
Cross cheque focuses on the instruction given by the drawer (maker) of the particular cheque to the drawee bank. This instruction demands to pay the cheque at the counter of the bank, but with a strict direction to pay it to a person who offers it through a banker. What is the purpose of crossing? Crossing makes it possible to trace the person to whom the amount/payment has been made. In India, there are various crossing tools to safeguard cheque payments such as:
This type of cheque crossing requires two parallel transverse lines. There isn’t any restriction on putting these parallel lines on a specific area on the cheque, but they can be drawn anywhere. Usually, it is advisable to put it on the top left corner of the cheque. The usefulness or significance of this crossing is that the cheque should essentially be paid only to the banker.
Special Crossing cheque does require the name of the banker. The effect of this type of crossing is that the cheque should be funded only to the banker to whom it is crossed. It is a reminder to all the people that a special crossing cannot be changed into a general crossing.
Not Negotiable Crossing
In this type of cheque crossing variety, the paper document needs to contain the words ‘not negotiable’. Moreover, the cheque can be crossed specially or generally. What is the effect of this crossing? The cheque remains non-negotiable (transferrable) as well as the title of the transferee will not be better than the title of the transferor.
Uncrossing a Cheque
A cheque leaf, commonly known as a Cheque, is a tool which is used to transfer funds from one bank account to another. A bundle of cheque leaves attached is a cheque book which is provided by the bank to its customers.
There are various ways in which you can apply for a new chequebook using any of the following means given below:
Different banks across India have stated specific guidelines regarding the proper filling of cheques. It is important to go through your bank’s guidelines for acquiring proper awareness. Further, do not miss to check out conditions for cheque bounce; this would make you more alert during the cheque filling process.
A bank can refuse to make the payment mentioned on a cheque due to various reasons. Some of them are mentioned as follows:
MICR or Magnetic Ink Character Recognition is a 9-digit code generally printed at the bottom of the cheque leaf. The first three digits represent the city, the next three the bank and the last three the particular branch code. The MICR code on cheque helps in easier identification of cheques, eliminate payment errors and process cheque payments faster.
Q. What is the punishment and penalty related to a dishonoured cheque? Ans. The court, after receiving the complaint along with relevant documents, will start the case. If the drawer is found guilty, as per Section 138 of the Negotiable Instruments Act, 1881, he/she can be sent to the jail for up to two years and/or pay the penalty of amount twice the cheque amount. In addition, the banks also have the right to close the guilty person’s account (on repeated bounce cheque offence) or stop their cheque book facility. The bank may also charge a penalty to both the drawer and the payee for the inconvenience, extra paperwork and wasting the bank’s time.
Q. What happens if the payee takes legal action against the drawer? Ans. If the payee decides to proceed legally, a chance is given to the drawer to pay the cheque amount immediately. For this, the payee is supposed to send a notice to the drawer within 30 days from the date the payee receives the “Cheque Return Memo” from the bank. The notice should state that the cheque amount must be paid to the payee within 15 days of receiving the notice.
If the drawer still fails to pay money to the payee within 30 days of receiving the notice, the payee has full right to file a criminal report against the drawer as per Section 138 of the Negotiable Instruments Act, 1881. But the complaint or report should be registered in a magistrate’s court within a month of the expiry of the notice period.
Q. What happens if a cheque is dishonoured by the bank? Ans. As per the Negotiable Instruments Act, 1881, if a cheque is dishonoured by the bank due to insufficient money in the bank account of the drawer then it is a criminal offence. In such a case, the drawee bank issues a ‘Cheque Return Memo’ to the payee’s bank mentioning the reason for non-payment. In turn, the payee’s bank handovers the bounced cheque and the memo to the payee.
Now the payee has the choice to either re-present the cheque within three months from the date mentioned on it or legally prosecute the drawer. If the payee proceeds with the former choice and if even the second time, the drawer fails to make the payment then the payee has the right to sue the drawer. However, the payee can sue the drawer only if the amount mentioned on the dishonoured cheque is to pay off a debt or any other liability of the drawer towards the payee. The drawer cannot be sued in such cases in which the cheque was handed out as a gift or to lend a loan to the payee or for unlawful purposes.
Q. What is the difference between depositing and cashing a cheque? Ans.
Q. Is a cheque payable outside of banking hours? Ans. No, a bank is liable to make the payment only during working hours.
Q. Can banks refuse to make a payment? Ans. Yes, the bank can refuse to make a payment in the following circumstances: If the cheque is without a date In case more than 3 months have elapsed since the issue of the cheque In case a post-dated cheque is presented before its date
Q. What is a cheque number? Ans. It is a 6-digit unique number printed on each cheque leaf.
Q. Can a cancelled cheque be used multiple times? Ans.Yes, the same cancelled cheque can be used multiple times.
Long before ATMs and online money transfer services were available, we conducted most banking transactions via cheques. We needed cheques to withdraw money, deposit it, and make third party payments. Even today, cheques are not rendered redundant. Granted, its usage has reduced compared to, say, two decades ago, but they continue to remain in circulation. If you are taking baby steps in the banking world and wish to know how to deposit cheque in bank, read on.
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The most common way how to a deposit cheque is at a bank branch. Here are the steps.
If you cannot visit your bank branch, you can also deposit cheques at select ATM kiosks with cheque depositing facilities. Here are the steps.
The bank credits the funds into your account within the shortest time possible.
Unlike with cash withdrawal, where you can use other bank ATM, you cannot deposit cheques at other bank ATMs. Also, some ATM kiosks also have a drop box facility, to deposit cheques in an envelope akin to a deposit slip. Here, you will not get the cheque deposit receipt. As a DBS Savings Account holder, you can consult your relationship manager if you wish to know how to deposit cheques in DBS bank branches or ATMs and get the necessary information about your nearest DBS branch and ATM kiosks.
Never hand over the cheque with only a signature. Always add payee name, date, amount and other details to avoid any misuse of the cheque. Always write the mobile number, connection number, and other details on the backside of the cheque when making a bill payment.
A cheque is a written "order to pay", which you sign and give to another party as payment. When you pay using a cheque, you are instructing your financial institution to give money from your account to the person (or organization) that is depositing the cheque.
Payments Canada and its participant financial institutions have established rules and standards which set out the specifications for cheques (Standard 006), and cheque images (Rule A10), which can be deposited using your mobile phone.
If you're filling out a cheque by hand, use a ball-point or roller pen with black or blue ink.
If you're using a computer to do this, use a minimum 10 point font and dark ink colours that will show up well in images (black, blue or dark purple).
We recommend including the amount of the payment in words (even though it's not legally required), since it serves as a backup if the amount in figures is questioned.
You should ensure that you have sufficient funds in your account to cover the cheques that you write. It's a good idea to keep a record of the cheques you write so you know which ones have been deposited and which ones are still outstanding.
Review your account activity regularly, and report any issues to your financial institution.
Make sure to keep your chequebook in a safe place, and never pre-fill or pre-sign cheques.
When accepting a cheque, make sure the person paying you has filled all necessary fields correctly and has signed it.
If the cheque is made out to more than one person or if someone is giving you a cheque that was made out to them, make sure that it has all the required signatures on the back of the cheque (endorsements). For example, if a cheque is made out to you and John Smith, you need John Smith's signature on the back of the cheque to deposit it in your account. Or, if a cheque is made out to Jane Doe, she can sign the back and give it to you. If you're unsure whether an endorsement is required, check with your branch.
When you deposit a cheque, your financial institution updates your account records to show a deposit of the amount indicated. Depending on your bank's policies, you may able to access the money right away, or the funds might be put "on hold".
Federally regulated financial institutions are required by law to limit the hold period on cheques. Our rules and standards do not address holds on cheques, but the Financial Consumer Agency of Canada's (FCAC) website has useful information on your rights and responsibilities.
Cheques are considered stale-dated after six months, unless certified. A stale-dated cheque simply means that the item is old, and not necessarily invalid. Financial institutions may still honour these items, but there is no obligation to do so. Government of Canada cheques don't stale-date and your financial institution can confirm that they are still valid.
Cheques should not be deposited before their due date.
To encourage you to pay your credit card dues on time, issuers allow you to pay through several means like NEFT, NACH, Bill Desk, Cheque, or cash. Read on to understand how one can pay their credit card bills via cheque.
Here are the steps you can follow to make a credit card payment through cheque-
Visit a branch of the bank where you have an account. In the deposit slip, fill out the following details:
It is always best to read the cheque payment procedures and guidelines specific to your issuer to ensure that the information provided by you is accurate. Note that the time for cheque clearance varies from one financial institution to another based on several factors. So, keep the turnaround time in mind when making a cheque deposit to ensure that you don't miss the deadline. Also, note that banks may levy a clearance fee depending on the amount, and you will also have to bear cheque bounce charges if any.
This is an excellent option if you don't have access to the internet or online banking.
Pay your credit card bills via the issuer's mobile app to avoid incurring charges on cheque payments and eliminate standing in long queues. Many credit card issuers offer this facility for seamless bill payment. For instance, you can pay the Bajaj Finserv RBL Bank SuperCard bill via the RBL MyCard application. Since it is always accessible, you can pay your bill anytime, anywhere, and stay on top of your finances. Moreover, you can also manage your credit card's security and pay your credit card bill payment via Bajaj Finserv’s BBPS Platform. To register, send an SMS with 'MyCard' to 5607011 or download it from the Google Play Store or Apple AppStore.
Additional Read: What is CVV?
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