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Types of Cheques

Arjun EP

Published on: June 23, 2020

Mainly there are three types of cheques in practice i.e. bearer cheque, order cheque and crossed cheque.

BEARER CHEQUE

Mostly “OR BEARER” words are written on the face of cheque.

This type cheque is known bearer cheque.

Amount of bearer cheque is paid to the person whose name is mentioned on it or who presents it in the bank.

Bearer cheques are risky.

If such cheques are lost, finder person can collect payment from the bank.

ORDER CHEQUE

When “OR BEREAR” words are cancelled and “ORDER” words is written on the cheque, it is known order cheque.

To take money of order cheque, payee (cheque holder) must show identification. Identification may be driving license, citizenship, passport, seal of organization etc.

Amount of cheque is payable to the person whose name is written on the cheque after proper identification.

CROSSED CHEQUE

When two slanted or parallel lines are drawn in left hand side of cheque, it is known crossing of cheque.

These lines are drawn in front side of cheque.

When a cheque is crossed, the bank will not make payment direct.

The cheque holder must have bank account.

First cheque is deposited into account then the amount of cheque will be credited into the account.

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TYPES OF CROSSING CHEQUE

There are three types of crossed cheque; they are ordinary crossed cheque, special crossed cheque and account payee cheque.

General crossing

General crossing is done by drawing two parallel lines on the face of the cheque.

It may be with or without the words “& Company”.

The plain crossing means cheque can be paid only through account.

Special crossing

Special crossing is done in the same way a general crossing is done.

But in slanted or parallel lines special instruction is written.

Sample of special crossings are:

Keep in Mind (KIM)

‘Not Negotiable’ cheque cannot be endorsed; if the bank credits this cheque to a different account,

you can recover the money from the bank.

Banks name like ‘Nabil Bank Only’ instructs, cheque holder must have his account with Nabil Bank.

Amount like ‘Rs Five Lakh Only’ safeguards from alteration of the amount.

Some name of other cheque:

Anti-dated cheque, post-dated cheque, stale cheque, travelers cheque etc.

Difference between Bearer Cheque and Order Cheque

Bases	Bearer cheque	Order cheque
Payment	Bank can pay anybody who presents bearer cheque into the bank for payment.	Bank pays only the person whose name is written on order cheque.
Period	Bearer cheque needs short time for processing for payment.	Order cheque takes long for processing for payment.
Risk	Bearer cheque is risky. If it is lost, anybody can withdraw money from bank.	Order cheque is unrisky because another person cannot withdraw money from bank.
Endorse	Bearer cheque does not require endorse.	Bearer cheque requires endorse.