In the country, a cheque is a part of the active financial system that makes it a crucial instrument to send and get money without any physical transfer of cash. How useful is the cheque, and what is a cross cheque?
In simple words, a cheque is tagged as a critical document that could be used by an individual, organization, or government for the transaction of varied fund values.
A crossed cheque is primarily any cheque that is crossed with two parallel lines. The lines could be drawn either across the whole cheque or with the top left-handed corner.
It simply means that the particular cheque could only be deposited straightway into a bank account and would not be instantly cashed by a bank or by any credit institution. This ensures a level of security for the payer since it needs the funds to be handled with a collecting bank.
Cross cheques concentrate on the instruction that is given by the drawer of the specific cheque to the drawee bank. The instruction requires to pay the cheque at the counter of the bank, with a strict direction to pay it to a person that gives it through a banker.
Crossing makes it feasible to trace the person to whom the amount of payment has been made. There are different crossing tools to secure cheque payments, such as:
This type of cheque crossing needs two parallel transverse lines. There is no restriction to putting these parallel lines on a particular area on the cheque, but they could be drawn anywhere. Usually - it is advisable to put it on the top left of the cheque.
The usefulness of this crossing is that the cheque needs to be essentially paid to the bank.
Account payee crossing is also known as a restrictive crossing. This kind of cheque has to comprise the words account payee or account payee only. The cheque needs to be crossed either generally or specially.
The importance of this type of crossing highlights that the cheque is not negotiable anymore.
The special crossing cheque does not need the name of the banker. The effect of this kind of crossing is that the cheque needs to be funded only to the banker that it has been crossed. It is a reminder to all of the people that a special crossing would not be changed into a general crossing.
In this kind of cheque crossing variety - the paper document needs to have the words not negotiable. Moreover, the cheque could be crossed specifically or generally. The cheque stays non-negotiable as well as the title of the transfer would not be better than the title of the transferor.
A cheque's validity is believed to be three months from the date it is drawn. It gets stale after this time period, and the drawee bank may refuse to pay the money. However, if the cheque has become obsolete due to the expiration of the validity term, the drawer can re-validate it.
The above term denotes that the money cannot be transferred to any other bank account than the one specified on the check. Account payee crossover also ensures that funds are moved to a bank account rather than being given in the form of cash.
No. A cheque that is not crossed does not exist but is not preferred because of the low-security measures. A cheque that does not have a crossing is known as an open cheque.
This essentially denotes a broad crossing. A general crossing is not covered by the statute and can be 'opened' (erased) by the cheque payer if he signs the action of opening the crossing with his complete signature.
It's crucial to note that practically all banks now issue cheque books with cheques crossed 'A/C Payee Only' or 'A/C Payee'; however, customers do have an option. Customers who specifically request a chequebook with open cheques may have personal motives for doing so, but their banks will undoubtedly highlight the hazards.