What are the different types of cheques
Cheque is an important document that an individual, companies, governments and many others use to transact their business. By definition, cheque can be termed as a negotiable document to transfer money either in physical form or to effect inter account transfer.
Unless or otherwise stated, a cheque is a signed unconditional order addressing the bank to credit it by the issuer. The issuer of the cheque will have an account with the bank to which it is connected. The account can be either savings type or a current account. A cheque transaction is one of the safest ways of conducting the business because it leaves an entry against the cheque honoured by the bank in the banking transactions conducted by you which can be traced back in case of necessity. There are various types of cheques and various ways of issuing a cheque.
Different types of cheques based on methods of issuing
Open cheque or bearer cheque: The issuer of the cheque would just fill the name of the person to whom the cheque is issued, writes the amount and attaches his signature and nothing else. This type of issuing a cheque is also called bearer type cheque also known as open cheque or uncrossed cheque. The cheque is negotiable from the date of issue to three months. The issued cheque turns stale after the completion of three months. It has to be revalidated before presenting to the bank.
A crossed cheque or an account payee cheque: It is written in the same as that of bearer cheque but issuer specifically specifies it as account payee on the left hand top corner or simply crosses it twice with two parallel lines on the right hand top corner. The bearer of the cheque presenting it to the bank should have an account in the branch to which the written sum is deposited. It is safest type of cheques.
A self cheque: A self cheque is written by the account holder as pay self to receive the money in...
Please join StudyMode to read the full document