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What Are Different Elements Of A Cheque

A cheque is the main document that enables the payment of money from a bank account to a person or another bank account. It is therefore necessary to be aware of the elements of a cheque. A cheque, completely filled up and signed is a written instruction from you as the account holder to your bank and it authorizes payment from your account to whoever is named on the cheque.

Some elements of the cheque are already printed on it, common to all cheques. There are spaces in the form of lines and boxes to be filled out. All cheques bear the name of the Bank which has issued the cheque while some cheques have the Account Holder’s name and the account number printed on each leaf. In case the name and account number are not printed, you have to fill it in correctly.

Basic elements of a cheque

A cheque has the following essential elements

1) The Name of the Bank, also called the “drawee bank” or paying bank.

2) The person to whom the cheque is to be paid is called the ‘Payee’. Do make sure that the name of the person to whom the cheque is being made out to is correctly spelt and written close to the words “pay to”. A line should be drawn after the complete name is written to avoid alteration.

3) Date of the cheque. The date must be the current date in order for the receiver to be able to receive the payment. The date includes the day, month and year. A cheque is valid for 3 months from the date of issue.

4) At the end of the line from ‘pay to’ you will find the words ‘or bearer’. This refers to the person who is carrying the cheque and the payment will be made to this person if the cheque does not specify the person to be paid. It is advisable to cross out “or bearer” printed on the cheque when writing out a cheque to avoid a stolen cheque from being misused or paid out.

5) The payment amount should be written in words next to the printed words on the cheque saying ‘a sum of’(Say, Rupees twenty thousand only). The same value should be written in the box beside it in figures (Rs.20000/- only).

6) The name of the Drawer or the person holding the account appears on the cheque. Your name may be printed on your cheque leaves or you might have to write it at the bottom right side of the cheque.

7) Your signature is to be written above the section where your name is printed. Your signature as the “drawer” of the cheque should also tally with the specimen signature that your Bank has on record. You might be required to put your signature additionally on the back of the cheque to endorse it.

8) Your Account Number, a fifteen digit or fourteen digit number, varying from Bank to Bank, is printed on each cheque leaf. If it is not printed, you have to fill it in in the designated boxes, one digit per box.

9) Serial Number of the cheque. Each cheque has a different cheque number for identification purposes. You will find a series of numbers at the bottom left side of a cheque. The cheque number is usually a six digit number enclosed within inverted commas ‘000000’.

10) Your cheque also bears a nine digit number called the MICR – Magnetic Ink Character Recognition code which is unique for every bank branch in India. The cheque also bears the drawee bank’s state, branch and sort code which are a series of numbers appearing next to the cheque number.

11) Your cheque may also contain an internal code by the issuing bank called the “Transaction id”.

12) A cheque may be crossed at the top left corner of the cheque with two lines or have “Account payee only” written there to denote that payment should be made to the account of the person who is being paid. This is to secure the transaction.

A valid cheque contains in writing a current date, name of payee, a specified amount written in words and figures and duly signed by the drawer. A cheque is always drawn on a specific bank mentioned on the cheque and Cheque book facility is made available only to an account holder who is supposed to maintain certain minimum balance in the account. It can be encashed at the drawee bank in person or deposited to the payee’s bank if the cheque is an account payee cheque. A cheque is an important tool in banking and should be kept safely.
Click to here to read more on how to protect yourself from cheque frauds.

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