Cheque and Types of cheques

Banking Awareness Study Material

Cheque and Types of cheques

A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. It is an unconditional order in writing drawn by a customer on his bank, specifying bank to pay on demand a certain sum of money to a person named in the cheque or to the bearer or to the order of a stated person.

Types of cheques

1. Open Cheque
   A cheque is called ‘Open’ when it is possible to get cash over the counter at the bank. The holder of an open cheque can receive the payment over the counter at the bank, deposit the cheque in his counter at the bank, pass it to someone else by signing on the back of a cheque.


2. Crossed Cheque
   The payment of a crossed cheque is not made over the counter at the bank. It is only credited to the bank account of the payee. A cheque can be crossed by drawing two transverse parallel lines across the cheque, with or without the writing ‘ Account Payee’ or ‘ Non Negotiable’. These lines are usually drawn on the upper left hand corner of the cheque.


3. Bearer Cheque
   A cheque payable to any person to presents it for payment at the bank counter is known as a “Bearer Cheque”.


4. Order Cheque
   An order cheque is one which is payable to a particular person. In such a cheque the word ‘bearer’ can be cut out or cancelled and the word ‘order’ may be written. The payee may transfer it to someone else by signing his or her name on the back of the cheque.