Types of Cheque:

Open Cheque

Anyone who finds an open cheque can cash it. So it is not safe to send an open cheque. This cheque is sent to persons who do not have bank accounts. Money for this type of cheque can be received over the counter.

Bearer Cheque

 This has bearer written on the cheque. This cheque has the same features of an open cheque.

Crossed Cheque

When two parallel lines are drawn across the face of a cheque, it becomes a crossed cheque. Such a cheque has to be deposited in the bank account and sent for clearing. Money is not paid over the counter in the case of a crossed cheque. There are different types of crossings:

-          General Crossing: These cheques can be paid into any bank. General crossed cheques with “A/c Payee Only” written within the two parallel lines have to be paid into the account of the payee only.

-          Special Crossing: These cheques must be paid into the bank written between the two parallel lines.

-          Not Negotiable Crossing: The payee cannot negotiate such cheques to another person.

Dishonoured Cheques

A cheque may be dishonoured for the following reasons:

·         There may not be sufficient funds in the drawer’s account to make the payment.

·         The cheque may be a stale cheque. That is it is presented to the bank six months after the mentioned date on the cheque.

·         The drawer’s signature may not be the same as the specimen signature.

·         The amount written in words and figures may not be the same.

·         The cheque is mutilated or defaced.