Knowledge, Information and Experience
What is a Cheque
To put it in simple words, a cheque is nothing but a written bill of exchange that is written by a bank account holder to pay for goods or services. It is always issued in favor of other parties, there may also be third parties and it is an order for the bank to pay the person whose name the cheque bears or is in favor of.
In modern times we have option of using various negotiable instruments to effect any monetary transactions. However, cheque is currently one of the most common negotiable instruments or bill of exchange, used globally.
Know Your Cheque:
Cheques are the backbone of the banking industry and is still a very important negotiable instrument in the country. Each cheque comes with a cheque number, IFSC code and MICR. MICR, expanded as Magnetic Ink Character Recognition (MICR), is a code printed usually at the bottom of the cheque leaf and enables easier identification of cheques, helps eliminate payment errors and process cheque payments in a faster manner.
MICR is a 9-digit code, where the first three digits represent the city, the next three the bank and the last few digits the specific branch code. The main use of MICR codes in cheques is to aid the processing of cheques in a more efficient and speedy manner.
On the other hand, an IFSC code too, is an integral part of the banking system and is printed on your cheque leaf. This code helps identify specific bank branches without any errors for smooth and efficient fund transfers from one bank to another.
Features of Cheque:
Cheques can be issued against savings or current accounts
A cheque is always drawn on a specified banker
It is an unconditional order
The payee of a cheque is fixed and certain and cannot be changed
The payment will only be made in the name of the payee/beneficiary
It is an instrument that is payable on demand
A cheque will be considered invalid if does not contain the date
How to Apply for a New Cheque Book?
Applying for a cheque book is an easy process and can be done using various methods such as applying online, through an ATM, visiting the branch or using your bank’s mobile app. Also, every cheque book comes with a requisition slip, all you need to do is fill the same and submit it to get a new chequebook.
When does a bank have a right to refuse to make a payment?
In cases when the cheque is undated
If 6 months have passed since the issue of the cheque
When a postdated cheque is presented before its date
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