It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. Please consult your financial advisor before making any financial decision. A not negotiable cheque a/c payee crossing occurs when the words “Not Negotiable” are written between two parallel lines on a cheque.
If you try to cash or deposit the cheque into another person’s account, the bank will refuse to do so. Bearer cheques are convenient for quick and easy transactions but pose a higher risk of fraud or theft. Because the cheque is not restricted to a specific payee, anyone can claim the funds if the cheque is lost or stolen. Therefore, it is important to exercise caution when issuing bearer cheques. A bearer cheque is a type of cheque that is payable to the person holding or presenting it. This means that any individual who possesses the cheque can encash it without needing to provide identification or be the named payee.
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The cheque is issued without crossing, allowing it to be transferred from one person to another simply by handing it over. Additionally, the cheque is valid for three months from the date of issue, providing a clear window for the payee to deposit it. Both the issuer and the payee must follow the bank’s guidelines to ensure the cheque’s validity and smooth processing. The details mentioned on the cheque, such as the payee’s name, the amount, and the signature of the issuer, must be clear and without any errors. No, only the named payee can encash an account payee cheque, ensuring a secure transaction. There are several situations in which an account payee cheque may be used.
Special Cheque Crossing
Special cheque crossing involves marking a cheque with two parallel lines along with the name of a specific bank written between them. Unlike general crossing, special crossing directs payment to be made only through the specified bank, adding an additional security layer. This means that even if someone else presents the cheque, it can only be honored if it is processed through the bank mentioned in the crossing. This person or organisation can authorize the bank to pay a specified amount to another party.
Potential risks associated with account payee cheques
- If the cheque is from a different bank, it takes up to 3 working days for clearance.
- A holder cheque is perhaps the most prone to fraud, but an APC is a very safe document.
- Finally, sign the cheque at the bottom right corner, as your signature authorises the payment.
- From above image, you notice how to change the normal cheque leaf into crossed cheque.
- On the top left corner of the cheque leaf, draw two parallel lines.
- When a cheque is presented for payment, it is the drawee’s responsibility to process it.
To further understand the notion, one must first distinguish among the three terms mentioned below. So by mere crossing you are no longer making payment to PAYEE ONLY. Also in case of dishonor of cheque (in the above example), Mr.Rohan can sue Mr.Satish and in return Mr.Satish to me and finally I can sue to the drawer of cheque. It is important to visit the bank wherein the account holder maintains their account and where the cheque has been issued. You can make a cheque as an account payee by drawing two parallel lines on the left top of a cheque. All you need to know about the meaning and usage of an account payee cheque.
Account payee cheques are a type of cheque specifically designed to be deposited into the account of the person or entity to which the cheque is made. This type of cheque is different from a regular, or “open,” cheque, which can be cashed by anyone who holds it. Another risk involves the time it takes for the funds to be cleared. Unlike electronic transfers, which are instantaneous, the clearing process for an account payee cheque can take several days.
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Crossed cheques are those that are marked by two parallel lines on the top left, with or without the words ‘a/c payee’ written between the lines. Any payee who has been issued a payee cheque is typically required to deposit the cheque in their account and not seek a direct cash payment. A cheque is a written order directing a bank to pay a specific sum of money to a named person or entity. It is essentially an instrument that facilitates the transfer of funds from one party to another.
You can also enjoy the convenience of making rapid payments and transactions, backed by HDFC Bank’s reliable services and comprehensive banking solutions. Join us today to unlock a world of seamless banking experiences tailored to your needs. A cheque which carries a future date on it is called a post-dated cheque. It cannot be deposited and encashed until the date specified on the cheque has arrived. This type of cheque is often drawn for future payments (e.g. loan EMIs, scheduled payments, etc.) or to secure a transaction.
The cheque cannot be cashed or deposited into another person’s account. The “account payee only” instruction is essential to prevent fraud and ensure the funds are paid to the intended recipient. Discover the benefits and intricacies of account payee cheques as we delve into their purpose, usage, and significance in ensuring secure and targeted payments.
