Types of Cheques

What is a Cheque and Its types – Cheque Meaning Types Dishonor Uses – A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.

What is a Cheque and Its types


According to section 6 of Negotiable Instruments Act, A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.

Types of cheques

1)Open cheque – To get cash from the counter at the bank then this cheque called an open cheque. In other words to get cash from the counter and deposit the cheque in his account and pass to someone by signing on the back.

2)Crossed cheque –
In open cheques, there is a risk of theft, and it can be avoided by issuing other types of cheques is known as a crossed cheques. It only transfers to the account of the payee.

3)Bearer cheque –
A cheque which is payable to anyone who presents if for payment at the bank counter these types of the cheque are known as a bearer cheque.

4)Order cheque –
A cheque which is payable to a particular person this type of cheque is known as an order cheque.

5)Blank cheque – Blank cheque contains a drawer signature only and leaves the other columns.

6)Stale cheque – Stale cheque means a cheque which is more than six months old.

7) Mutilated cheque – Multilated cheque means if the cheque is torn into two or pieces.

8)Post-dated cheque – Post-dated cheque means if cheque bears a date later than the date of issue.

9)Gift cheque – Gift cheque means cheques that are used for offering a presentation on any occasion.

10)Traveler’s cheque – Traveller’s cheque means cheque issued by the bank for remittance of money from one place to another place.

Parties to cheque

1)Drawer – The person who draws the cheque.
2)Drawee – The person who is directed to pay the amount written on the cheque.
3)Payee – The person to whom the amount is to be paid.

Section 138 – Dishonor of cheque

Negotiable Instruments Act, 1881 is provided in section 138 which contains Dishonor of cheque. Dishonor of cheque when if funds are insufficient in the account and signature mismatch. Dishonor of cheque is an offense and is punishable by imprisonment which extends up to two years or fine or with both. When the bank refuses to pay the amount of cheque to the payee it means dishonor of cheque.

Uses of cheques

1)It is convenient to receive money
2)Receipt need not be obtained if payment made by crossed cheque
3)Amount remains intact when crossed cheque lost
4)An automatic record of the account is maintained in banker’s books when payments made by cheques

Types of Cheques

In India, as in many other countries, there are various types of cheques that serve different purposes based on their characteristics and features. Here are some common types of cheques:

Bearer Cheque: A bearer cheque is payable to the person who presents it at the bank, regardless of whether that person is the payee named on the cheque or not. It can be negotiated by delivery, and the name of the payee is not mentioned on the cheque.

Order Cheque: An order cheque is payable only to a specific person or entity named in the cheque. It requires endorsement by the payee in order to be cashed. The name of the payee is mentioned on the cheque.

Crossed Cheque: A crossed cheque has two parallel lines drawn across the face of the cheque, indicating that the payment should be made through a bank and not directly over the counter. Crossed cheques are generally considered safer as they can only be credited to a bank account.

Account Payee Cheque: This type of cheque has the words “Account Payee” or “A/C Payee” written between the crossing lines. It ensures that the amount on the cheque is credited only to the account of the payee and not encashed in cash.

Post-Dated Cheque (PDC): A post-dated cheque is one with a future date written on it. It cannot be encashed until the specified date arrives. PDCs are often used for installment payments, loan repayments, or to ensure that funds are available on a specific date.

Gift Cheque: Some banks offer gift cheques that are pre-printed with a specific denomination and can be gifted to others. The recipient can encash it for the specified amount.

Traveler’s Cheque: While not commonly used these days, traveler’s cheques are a type of pre-printed cheque used by travelers as a safer alternative to carrying cash. They can be replaced if lost or stolen.

Self Cheque: A self cheque is one where the account holder writes the cheque in their own name. It’s used when the account holder wants to withdraw money from their own account.

Local Cheque: A local cheque is one that is payable only at a branch of the issuing bank within the same city or locality where the cheque was deposited.

These are just some of the common types of cheques used in India. It’s important to understand the characteristics and implications of each type to ensure proper use and to prevent any misuse or complications.

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