Cheque, Definition and Different Types of Cheques

What is Bank Cheque?

Bank Cheque or Cheque or check (in American English) is a writing order addressed to bank to pay on demand a certain sum of money to a person or to an account. A cheque is valid only upon signature of the owner of the bank account linked with the cheque.

Features of a Cheque:

  • It must be drawn on a specified Banker
  • The payee and payer are must be certain person / parties
  • It must contain an order to pay a certain amount of money
  • It should contain the signature of the account holder

To keep in Mind: It is important to note that there are a number of rules that apply to this type of check.

  • You must have sufficient funds in your account before you can write cheque (check)
  • Spelling errors and missing signatures are not acceptable
  • Cheques are generally valid for three months


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Types of cheque:

What is a Bearer Cheque?

A bearer cheque is payable to the person whose name is specified on cheque or the person who present the cheque at the bank. To convert an account payee into a bearer cheque, you must write the account holder’s name on the cheque, and then cross two parallel lines on the cheque. This will transfer the money to the person specified on the check.

Example: Ajay owner of the bank account write a cheque (check) on the name of Vishal. Now Vishal can cash the amount written on the cheque at the cash counter of Ajay’s bank.

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What is Self Cheque?

A self cheque is a document issued by an individual to withdraw money from his or her own account. This cheque is usually written in the account holder’s name, and it can be cashed from any bank branch where the account is held.. In simple words a self cheque is issued by bank account holder to himself to withdraw money from his own bank account. A self cheque is also a bearer document.

Example: Puneet own the bank account write a cheque for self to physically collect money from his own account.

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What is Account Payee Cheque?

Account payee cheque is also called crossed cheque. These cheques cannot be encashed at bank’s cash counter like self or bearer cheque. An account payee cheque can be only credited to payee’s bank account.

Example: Versha write a crossed cheque for Ahuja Store for the purchase of grocery. Amount written on the cheque will be transferred from Versha’s bank account to Ahuja Store’s bank account.

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What is an Ante-Dated Cheque?

An Ante-dated cheque is a cheque which was filled and signed on any past day and now presented at the bank. Most cheque have validity of 3 months.

Example: Salary cheque is given to Anu on 1st of Month but Anu present the cheque at bank’s cash counter on 10th of Month.

What is a Post-Dated Cheque?

A post dated cheque is a cheque which bears a date which is yet to come is called post-dated cheque. This cheque cannot be honored before the date specified on it.

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Example: Vivek write 12 post-dated cheque on the name of Insurance company with date written, 1st of each month. Bank will honour each cheque on the the date written on cheque.

What is Stale Cheque?

A stale cheque is cheque which is presented at bank after 3 months of the date specified on the cheque. Bank will not honour a stale cheque.

Example: Kavish got a cheque with date specified 2nd March but present that cheque in bank in month of September. Bank will not honour that cheque as it is stale cheque.

What is Crossed Cheque?

A crossed cheque is crossed with two parallel lines on top left of the cheque (check) or across the whole cheque. A crossed cheque can be credited to bank account only. Not all crossed cheque are A/C payee.

What is Dishonoured Cheque?

When a cheque is refused by Bank to pay the amount on the cheque due to some reason is called Dis-honour of Cheque.

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Common Reasons for Cheque Dis-honour:

  • No Signature / signature mismatched with bank’s record
  • Overwritten cheque
  • Not enough funds available
  • Amount written in numbers and words are different.
  • Cheque is filled with different pen and signature is made with different
  • Bank account is closed before presenting cheque at bank
  • payment of any or specific cheque is asked to stop by bank account owner
  • Bank details like account number are absent / misprinted
  • Court put order to insolve / close / hold the account
  • Cheque presented in bank before cheque date (in case of post dated cheque) presented after 3 months of cheque date.

Try this quiz on Bank Cheque (Bank Check)

Ques. What is a paper instructing the bank to pay a specific amount from one person’s account to another person’s account called?
(a) Lease
(b) Order
(c) Cheque
(d) Transfer

Ans. (c)

Ques. Which data input method do banks mainly use for processing bank cheque?
(a) OMR
(b) Bar Code Reader
(c) MICR
(d) Light Pen

Ans. (c)

Ques. Accounts are allowed to be operated by cheques in respect of:
(a) Both Savings bank accounts and cash accounts only
(b) Both Savings bank accounts and loan accounts
(c) Savings bank accounts and current accounts
(d) Both Savings bank accounts and fixed deposit accounts

Ans. (c)

Ques. When a bank returns a cheque unpaid, it is called?
(a) dis-honour of the cheque
(b) cancelling of the cheque
(c) drawing of the cheque
(d) payment of the cheque

Ans. (a)

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Ques. Cancellation of crossing can be done by
(a) Holder of the cheque
(b) Drawer of the cheque
(c) payee of the cheque

Ans. (b)

Ques. Collection of cheques for the customer is a __ function of banks
(a) Innovative
(b) lending
(c) trustee
(d) agency

Ans. (d)

Ques. Which of the following is used in the Banking Industry for the processing of cheques?
(a) OMR
(b) OCR
(c) MICR
(d) Bar Code

Ans. (c)

About the author


Jaspreet (Masters in Commerce-LLB) not only have exceptional command of Accounts and Commerce subjects but also have keen interest in Law. He is consistent in producing high quality assignments.


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