Cheques have a distinguished history from ancient times where the origin of cheques originated in the eastern Mediterranean during the first millennium. Some evidence proved that cheques were used in ancient India as an instrument during the Mauryan dynasty. The evidence of cheques in ancient India was used by names such as Adesha, Letters of Credit, and Banking Guilds. The ancient Romans are believed to have used an early form of cheque known as prescriptions in the 1st century BC. The cheque in the Negotiable Instruments Act of 1881 is defined as a bill of exchange drawn on a specific banker and payable on demand. Three parties are involved in the transaction: the drawer, the drawee, and the payee. In banking terms, a negotiable instrument is a document that promises its bearer a payment of the specified amount upon furnishing it to the banker or by a given date. This topic also includes the types of cheques with some short explanations of all the types used in daily life. This will be useful for the aspirants who are preparing for the banking exam and will get some knowledge about cheques.

Types Of Cheques PDF

Types of Cheques

In short, a cheque is known as an instrument or a document that a person can issue to the bank, to sum up the mentioned amount to the person whose name is on the cheque. A cheque is also known as a negotiable instrument which means a document that promises its bearer a payment of the specified amount on furnishing the document to the banker. There are 10 types of cheques, they are.,

• Bearer Cheque
• Order Cheque
• Crossed Cheque
• Open Cheque
• Post-Dated Cheque
• Stale Cheque
• Traveller’s Cheque
• Self Cheque
• Banker’s Cheque
• Mutilated Cheque
• Blank Cheque

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Bearer Cheque

• A Bearer Cheque is one of the types of cheques that can be cashed or deposited by anyone who has it.
• It is easy to use and can be used for quick payments, paying off debts, and business transactions.
• But the bearer cheque is not secured because anyone who has the bearer cheque can cash it easily.
• Bearer cheques can be theft or stolen and there is also a risk of unauthorized use.

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Order Cheque

• Order cheque is one of the types of cheques that is payable to a specific person or entity. 
• Order cheques are a secure form of payment because they require the payee to provide identification, which helps prevent fraud.
• An order cheque is a cheque where only the person or party whose name is on the cheque can withdraw the cash.
• Once the bearer has been canceled on the cheque it is automatically understood that this is an order cheque and the bank only completes the transaction once they have identified. 

Crossed Cheque

• A crossed cheque is primarily any cheque that is crossed with two parallel lines, these lines coil be drawn either across the whole cheque or with the top left-handed corner.
• Crossing cheques gives financial institution-specific instructions on how to handle cash.
• Two or more words such as ‘and company’ or ‘not negotiable’ may be used between the lines.
• There are different types of crossing tools to secure cheque payments they are;

• General Crossing 
• Account Payee Crossing
• Special Crossing
• Not negotiable Crossing

Open Cheque

• An open cheque is one type of cheque that is not to be crossed and can be cashed at by bank.
• The drawee of this cheque can also be transferred to another person by writing their name.
• To make the cheque open the word open should not be crossed off.
• The person issuing the cheque must ensure his/her signature on both the front and the back of the cheque.

Post Dated Cheque

• A post-dated cheque is a standard or regular cheque with a future date written on it instead of the date on which the cheque is written.
• It is one type of cheque that is a negotiable instrument that promises payment for future dates.
• Post-dated cheques are generally considered to be valid instruments for future payment.
• Post-dated cheques shouldn’t be deposited before their due date and also by the rule of the Supreme Court has ruled that stopping the payment of a post-dated cheque issued to discharge debt or liability, is a criminal offense under the Negotiable Instruments Act.

Stale Cheque

• Stale Cheque is a Cheque that is more than 6 months old from its date on the cheque.
• The validity of stale cheques and the time frame may vary from every bank.
• A stale cheque is not cashed or deposited within a specified period usually six months.
• After 3 months the cheque becomes stale, which is equal to a dead cheque in the sense that it is no longer valid.

Traveller’s Cheque

• The traveler’s cheque is a fixed denomination note issued by non-banking financial institutions for facilitating international travelers to carry and pay traveling costs safely in the travel.
• It can be exchanged in banks into cash and is useful for multipurpose bill payments.
• Travelers can choose the currency of the country where they plan to travel.
• They will pay with a charge according to the destinated country.

Self Cheque

• A self-cheque is drawn in the name of the account holder.
• You can identify self-cheques by the word ‘self ’ written in the drawee column.
• A cheque is mostly used to withdraw money, transfer money, or deposit money in own bank account.
• The self-cheque can be canceled when it is not presented to the bank and by also contacting the bank and providing the necessary details.

Banker’s Cheque

• The bank issues this cheque on behalf of an account holder to make a remittance to another person in the same city.
• This is a document that instructs the bank to pay a certain sum to a third party.
• It is a kind of bank draft that is payable within the town so it can be called a local bank draft.
• The commission charged on pay orders is less than that on a bank draft.

Mutilated Cheque

• A mutilated cheque is a cheque that has been damaged or torn to the point that is no longer legible or cannot be processed by a bank.
• These cheques are valid and can be cashed or deposited at the bank up until the date that they become stale.
• Banks generally only process these types of cheques for payment process with the confirmation of the drawer.
• In the U.S. treasury check is torn, folded, or has information missing that cannot be processed through normal banking channels.

Blank Cheque

• The blank cheques are also known as convenience cheques which the lenders usually offer their customers.
• The borrowers can use these cheques to pay off balances on other cards, make new purchases, or secure a cash advance.
• People sometimes use blank cheques for convenience or trust.
• A blank cheque doesn’t expire as long as the associated account is still active. 

Finally

We have discussed the types of cheques and their meaningful explanation which will help anyone looking to gain some knowledge about the cheques and their types as negotiable instruments.

Types of cheques - FAQ’s

Q. What is a cheque?

A cheque is considered a negotiable instrument which is a written order from an account holder that is used to instruct the bank to pay a specific amount of money to a designated person or entity.

Q. What are the types of cheques in India?

The common types of cheques in India are 

• Bearer cheque
• Self cheque
• Banker’s Cheque
• Order Cheque
• Post-Dated Cheque
• Stale Cheque
• Crossed Cheque/Amount Payee Cheque
• Traveler’s Cheque
• Blank Cheque
• Mutilates Cheque
• Open Cheque

Q. What types of cheques can be cashed?

The cheque is named an open cheque which is an uncrossed cheque. This cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. This cheque is transferable from the original payee (the original recipient of the payment) to another payee too.

Q. What is known as a stale cheque?

A stale cheque is a Checks which are at least 180 days old (6 months) are considered stale. Tellers in banks will sometimes reject a check if the date is over that limit.

Q. What kinds of cheques are not paid?

A dishonored cheque is not a payable cheque. which is also known as bounced cheque.