All You Know About Types of Cheques

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Cheque is a negotiable instrument issued by the account holder for making payment to a bearer or order. Account holder issue as well as signs the cheque. It can be issued for any date. Its payment can also be stopped by the drawer.

Banks issue two types of cheque books to their account holders:

1. Bearer Cheque Book: It is issued to the savings bank account holders
2. Order Cheque Book: It is usually issued to current and overdraft account holders

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There may be various types of cheque. Outlined below all there is to know about types of cheques:

(1) Blank Cheque

Blank cheque is a cheque on which the drawer puts his signature and leaves all the other columns blank. This is issued when the drawer has a high level of trust on the drawee as the drawee is free mention any amount and withdraw the same from the bank. Its issuance depends upon the understanding and faith between the drawer and the drawee.

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(2) Crossed Cheque

A cheque crossed has two parallel lines on the top left corner. The name of the payee is written on the cheque. It can only be cashed through a bank of the payee of the cheque. So it cannot be used for a cash withdrawal. It is relatively safer than any other type of cheque.

(3) Bearer Cheque

When the word 'bearer' is printed on the cheque leaf then that cheque is called a bearer cheque. Bearer means the person carrying the cheque is eligible to receive the amount mentioned on the cheque from the bank. The chances of fraud are the highest in case of Bearer's cheques because anyone can encash it causing a heavy financial loss to the issuer.

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(4) Order Cheque

Order cheque is a cheque on which the printed word "Bearer" has been cancelled/ striked out while issuing it. It is to be paid to the person whose name is mentioned on the cheque as payee in his bank account, when it is presented through the bank of the payee. If the payee himself has come to the bank to encash the cheque then the bank should ask for the identity proof of the payee and the identity proof number and payee's signature should be asked for on the back side of the cheque by the bank.

(5) Self Cheque

Self cheque is used by the account holder himself for withdrawing money from his own account or it can be issued to anyone also. You need to write "Self" on such cheque. If you write 'self' and hand it over to any other person the he can also go to the bank and can withdraw money stated on the cheque. This type of cheque is also not secure as anyone carrying this cheque is eligible to withdraw money mentioned on the cheque from the bank.

(6) Yourself Cheque

Drawer issues this cheque for buying demand drafts, pay orders,etc. In such cases, bank deducts the money from the drawer's account and issues demand draft, pay order, etc.

(7) Post Dated Cheque(PDC)

Post dated cheque is a cheque that bears a date later than the date of issue. One can issue such cheques for encashing at a specific time. The amount of the cheque cannot be drawn from the account until the date written on the cheque. People generally issue such cheques for making EMI payments.

(8) Stale Cheque

Every cheque has a validity period. Any cheque whose validity is expired i.e. which is presented at the paying bank after the validity period of its payment date (usually after 3 months) then bank will refuse to honour it and will not make its payment.

(9) Mutilated Cheque

A mutilated cheque is a cheque which is torn at one or more places. The bank makes the payment on this cheque only after getting the confirmation of drawer of the cheque.

(10) Gift Cheque

Gift cheque is a cheque issued by the bank for its customers who wish to give presents of money on special occasions to someone. Banks issue such gift cheque for some small extra charge. Instead of giving cash, some prefer to give such cheques on various occasions like marriage, birthday, etc.

(11) Dishonoured Cheque

When the bank returns a cheque due to insufficient funds in the drawer's account then is called a dishonoured cheque.

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