All You Need to know about Cheques

byPriyanka JuyalLast Updated: January 31, 2023
All You Need to Know about Cheques

Cheques are a popular form of cashless payment that allows users to easily make transactions. When a cheque is drawn, the amount is deducted from the drawer’s bank account and credited to the payee’s account. Despite the widespread use of digital banking, cheques remain a vital part of the banking sector and are used for a wide range of transactions, from small to large amounts. In this blog, we will explore why cheques continue to play a significant role in the world of banking and what sets them apart from other forms of digital payment.

What is a Cheque?

A cheque is a written order to a financial institution, typically a bank, to pay a specific amount of money from one account to another. The person writing the cheque, known as the drawer, instructs the bank to transfer a certain amount of money to the payee, the person receiving the money. When the payee deposits the cheque, the bank will withdraw the specified amount from the drawer’s account and transfer it to the payee’s account.

Bank cheques are considered a safe, secure, and convenient way to conduct transactions between two parties. Unlike transactions with cash, which can be lost or stolen, cheques are linked to the user’s bank account and can be easily traced and authenticated. This makes them a popular choice for transactions of all sizes.

Here are a few things to keep in mind about a cheque:

  • A cheque can be issued for a current or savings account.
  • Only the payee named on the cheque can cash it.
  • A cheque without a specified date is considered invalid.
  • A bank cheque is valid for three months from the date of issue.
  • The bottom of the cheque has a 9-digit MICR code that facilitates the cheque clearance process.
  • The amount of the cheque should be written in both words and figures.
  • The drawer must sign the cheque without overwriting.
  • The payee’s name should be properly written on the cheque.

What are the Characteristics of a Cheque?

A cheque is considered one of the most secure way of transactions. All of the characteristics of a cheque that make it stand out in the digital age are listed below:

  • It requires the presence of both the payer and payee to complete the transaction, making it difficult for someone to forge or steal the cheque.
  • The cheque includes security features such as watermarks, holograms, and special inks that make it difficult to reproduce or alter.
  • It has built-in protections, including the requirement for a bank’s stamp of approval and the need for both parties to sign the cheque.
  • The issuing bank guarantees the funds and ensures that the cheque will be honoured by the payee’s bank.
  • A paper trail is created for both the payer and payee, making it easier to track and resolve any disputes that may arise.
  • Cheques are written or printed documents that are used to make payments.
  • They involve three parties: the drawer (the payer), the drawee (the financial institution), and the payee (the recipient).
  • Only bank account holders can access and use cheques.
  • Cheques must be signed by the account holder and must include the payee’s name, the date, and the amount in numbers and words.
  • Cheques are generally valid for three months, but post-dated cheques are not considered invalid.
  • Cheques do not require a stamp, unlike bills of exchange.
  • A cheque is payable on demand

Benefits of a Cheque

There are several benefits to using cheques as a payment method, including

  • Cheques are more convenient to carry than large amounts of cash.
  • A crossed cheque is safer to carry than an uncrossed cheque because it can only be deposited into a bank account and cannot be cashed.
  • In the event of suspicious activity, a cheque payment can be stopped or blocked.
  • Cheques can be post-dated to be used at a later date.
  • The payee may be required to present a valid identity document when depositing a cheque, providing an additional level of security.
  • A single cheque can be used to transfer a larger amount of money than can be easily carried in cash.
  • Cheques protect against the physical loss of cash.
  • Cheques can also be used as identification documents in some cases.
  • Crossed cheques are traceable, making it difficult to use them fraudulently.

Types of Cheques

A cheque is a written document that instructs a bank to pay a specific amount of money to a specified person or entity. There are several types of cheques, including:

Order Cheques:

  • Order cheques are a type of cheque that can only be cashed or deposited by the payee named on the cheque.
  • Unlike other types of cheques, order cheques do not have the word “bearer” written on them, which means that they cannot be cashed or deposited by anyone other than the payee.
  • Before a payee can encash an order cheque, the bank must first verify that they are the original bearer of the cheque.
  • This added layer of security helps to prevent fraud and ensures that the funds are only distributed to the intended recipient.

Bearer cheques:

  • A bearer cheque is a type of cheque that can be cashed or deposited by anyone who presents it to a bank.
  • This means that the person who encashes the cheque does not need to be identified or prove their identity.
  • Bearer cheques are negotiable, which means that they can be transferred from one person to another by simply handing them over or sending them through the mail.
  • Because bearer cheques are negotiable, they are considered a relatively risky and insecure form of payment.
  • As a result, bearer cheques are not commonly used and have largely been replaced by other forms of payment, such as electronic transfers or personal cheques.

Open cheques:

  • An open cheque, also known as an uncrossed cheque, is a type of cheque that can be cashed or deposited by anyone who presents it to a bank.
  • Unlike a bearer cheque, which can be cashed by anyone without the need to identify themselves, an open cheque must be made payable to the person who presents it to the bank.
  • The person who receives the open cheque can then transfer it to another person by simply writing their name on the cheque, making them the next payee.
  • To be considered an open cheque, the word “Open” must not be crossed out on the face of the cheque, and the drawer (the person who wrote the cheque) must sign the front and back of the cheque. If the drawer does not comply with these requirements, the bank may refuse to process the payment.
  • When the payee of an open cheque receives the amount, they are required to sign the back of the cheque as proof of receipt. This helps to prevent fraudulent activity and ensures that the funds are transferred securely

Crossed cheques:

  • A crossed cheque is a type of cheque that has two parallel transverse lines at the top left corner.
  • These lines indicate that the cheque can only be deposited into the payee’s bank account and cannot be cashed by anyone else.
  • This added security measure reduces the risk of the cheque being received by an unauthorized person.
  • In order to deposit a crossed cheque, the payee must take it to their bank and deposit it into their account.
  • Some banks may allow the payee to deposit the cheque through an ATM or mobile banking app.
  • Crossing a cheque is not a requirement, but it adds an extra layer of protection for the payee.

Blank cheques:

  • A blank cheque is a cheque that has been signed by the person issuing the cheque (also known as the “drawer”), but has not been filled out with the payee’s name or the amount of money to be paid.
  • The drawee (the person or institution that will receive the cheque) has the ability to fill in the payee’s name and the amount of money to be paid on the cheque.
  • Blank cheques are often used in situations where the drawer trusts the drawee to fill in the appropriate amount and payee’s name.
  • For example, a parent may issue a blank cheque to their child to use for school expenses, or a business owner may issue a blank cheque to an employee to use for business-related expenses.
  • Blank cheques can also be used as a form of payment, but it is important for the drawee to exercise caution when filling in the payee’s name and the amount to be paid, as the drawer may not be aware of the details of the transaction.
  • It is also important to note that blank cheques are considered a high-risk form of payment and may not be accepted by some banks or financial institutions.

Post-dated cheques:

  • A post-dated cheque is a cheque that bears a future date on it.
  • The written amount on the cheque will not be transferred to the payee until the specified date is reached.
  • The cheque remains valid for a period of three months from the date it was written by the person issuing the cheque (also known as the “drawer”).
  • Post-dated cheques are often used when the payer wants to ensure that the funds will be available on the specified date and wants to avoid the risk of the cheque bouncing due to insufficient funds.
  • In some cases, post-dated cheques may be considered as a form of payment, but it is important for the payee to check with their bank to confirm that the cheque can be deposited or cashed on the specified date.
  • If a post-dated cheque is deposited or cashed before the specified date, it may be considered as a “stale” cheque and may be rejected by the bank.

Gift cheques:

  • Gift cheques are a form of payment that allows the giver to give a specific amount of money to the receiver without giving hard cash.
  • These cheques often have a decorative or festive design.
  • There is no maximum limit on the number of gift cheques that can be purchased at once.
  • The recipient can redeem the gift cheque at the issuer’s designated location or locations.
  • Some gift cheques may have expiration dates, so it is important to check the terms and conditions before purchasing or redeeming them.
  • Gift cheques can be a convenient and fun way to give money as a gift for birthdays, holidays, or other special occasions.

Bankers cheques:

  • A banker’s cheque is a cheque issued by a bank on behalf of a customer.
  • The bank is instructed to pay a specific sum of money to the payee within the city.
  • Bankers’ cheques are printed in advance and are not negotiable, meaning that they cannot be transferred to another person.
  • These cheques are valid for three months from the date of issue, but they can be revalidated under certain legal conditions.
  • Bankers’ cheques are often used for large or time-sensitive payments, as they are typically more secure and reliable than regular cheques.
  • In order to obtain a banker’s cheque, the customer must have an account with the issuing bank and must provide the necessary funds upfront.
  • The bank may charge a fee for issuing a banker’s cheque.
  • It is important to carefully check the details on a banker’s cheque before accepting it as payment, to ensure that it is valid and has not been altered or counterfeited.

Stale cheques:

  • A stale cheque is a written payment order that is no longer valid due to the passage of time.
  • Stale cheques are typically identified by the date written on the cheque, which must be within the validity period in order for the cheque to be cashed.
  • If a cheque is not cashed within the specified validity period, it becomes stale and cannot be used for payment.
  • In many jurisdictions, the validity period for a cheque is typically three months from the date of issue.
  • If a stale cheque is presented for payment, it will typically be rejected by the bank or financial institution.
  • In some cases, the issuer of the stale cheque may be able to renew the cheque by updating the date and presenting it for payment again. However, this may not always be possible and may require the issuer to issue a new cheque instead.

Travellers cheques:

  • Traveller’s cheques are issued by banks and can be used to make purchases or withdraw funds while traveling.
  • They are pre-printed with a specific amount of money and can be used to pay for goods and services around the world.
  • Traveller’s cheques are a safe and secure way to carry money while traveling, as they can be replaced if lost or stolen.
  • They are typically accepted by merchants and financial institutions around the world.
  • To use a traveller’s cheque, the purchaser must sign it when it is issued and when it is used for a transaction.
  • Some potential drawbacks of using traveller’s cheques include the fact that they may not be accepted at all locations and may incur fees or charges.
  • Overall, traveller’s cheques are a useful tool for travelers who want a safe and convenient way to carry and use funds while traveling.


  • A self-cheque is a type of cheque that is issued by an individual, rather than by a business or organization.
  • Self-cheques are typically used when the individual wants to withdraw money from their own bank account.
  • Because self-cheques are issued by the individual, they must be handled carefully to prevent them from being lost or stolen.
  • If a self-cheque is misplaced or lost, it is possible for someone else to visit the individual’s bank and attempt to cash the cheque. This can lead to unauthorized withdrawals from the individual’s account.
  • To prevent this from happening, individuals should take steps to protect their self-cheques, such as keeping them in a safe place and monitoring their bank account for any unauthorized transactions.

Mutilated cheques:

  • A cheque that has been torn or otherwise damaged is referred to as a mutilated cheque.
  • Banks often will not process payments made with a mutilated cheque unless the drawer of the cheque confirms the transaction.
  • In some cases, if the damage to the cheque is not severe and no crucial information is lost, the bank may still process the payment.
  • It is important to handle cheques carefully to prevent them from becoming mutilated, as this can cause delays or complications when attempting to make a payment.

How to Write a Cheque?

A check is a written, dated, and signed instrument that directs a bank to pay a specific amount of money to the bearer. Below is all you need to know about how to write a cheque:

A cheque consists of two parts:

  1. Writing the cheque, which includes the payee’s name, the amount, and the signature of the person issuing the cheque
  2. Recording the payment, which involves recording the transaction in the cheque writer’s account and in the recipient’s account.

Write a cheque:

It is important to make sure that a cheque is written correctly to avoid it being dishonoured or rejected by the bank. To write a cheque, follow these steps:

  • Date the cheque in the format “DD/MM/YYYY” and consider making it post-dated if necessary
  • Record the payee’s name correctly
  • Write the amount in words in the “Rupees” space, including the word “only” to prevent tampering
  • Write the same amount in numerals in the designated box on the right side of the cheque
  • Sign the cheque with the same signature used for other banking formalities to avoid cancellation or invalidation.

Record the Payment:

It is important to keep track of the details of the cheques that you have written, including the payee and the amount paid. This can help you ensure that you have an accurate record of your financial transactions and avoid any potential issues or confusion.

  • Make sure to keep track of the details of each cheque that you write, including the cheque number, date, payee, and amount.
  • Use a cheque register book to record this information for each cheque you write.
  • Include the cheque number, date, and amount in the register book, as well as a brief summary of the payee.
  • This will help you keep track of your cheques and ensure that you have an accurate record of your financial transactions.
What is a cheque?
A cheque is a written order to a bank to pay a specific amount of money from the drawer’s account to the payee’s account. It is a financial instrument that allows the transfer of money between accounts.
How long can a cheque remain valid?
A cheque has a limited period of validity, typically three months from the date it is issued. After this time, the cheque is no longer considered valid and cannot be cashed or deposited.
Does anyone still use a cheque?
While the use of cheques has declined in recent years with the rise of electronic payment methods, they are still an important part of the banking sector in some countries. In India, for example, cheques are still used for a large number of transactions and are considered a key pillar of the banking industry. Despite the widespread adoption of digital technology, cheques remain a popular and secure way to make and receive payments.
Can I write a self cheque?
Yes, it is possible to write a cheque to yourself. This is sometimes called a “self-cheque” or a “personal cheque.” To write a self-cheque, simply make the cheque out to your own name and deposit it into your own bank account.

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