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.
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.
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 Write a Cheque
Step 1: The first step is to cross a cheque, which means to draw two lines, which are parallel to each other, on the left hand corner of the document.
Step 2: Write the date and write the name of the payee in the ‘Pay’ column. Proceed to write the amount in words and add ‘only’ in the end,
Step 3: And then write it in numbers followed by this symbol ‘/-.’
Step 4: Sign at the bottom of the cheque
- Never overwrite on a cheque leaf
- Remember never to leave any kind of space between number or words on the leaf
- Never leave any column blank on a cheque
- Do not fold or staple a cheque
- Sign clearly and always use the same signature
Types of Cheques
- Open cheque: An open cheque is a type of leaf that a holder can use to get payment at a bank or deposit in his own account. It is also possible for the holder to issue this cheque to someone else.
- Crossed cheque: A crossed cheque is not like an open cheque, where payment is made over the counter. This makes it a more safer option because the money is only credited to the account in favor of whom the cheque is issued. To issue a crossed cheque, you have to draw two parallel lines on the left hand upper corner of the leaf. You can also write ‘account payee’ or ‘not negotiable’ on the document.
- Bearer cheque: In a bearer cheque, the payment is made to someone who is acting on behalf of the payee/beneficiary, in whose favor the cheque has been issued. In the leaf, it is a must to include the word ‘bearer’ to process this type of cheque.
- Order cheque: An order cheque is a type of cheque where the payment is made to a specified person other than the payee, in whose name, the cheque has been issued. For payment to be made, the payee will have to sign, and mention the name of the person who will be receiving it.
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.
- Internet Banking: This is probably one of the most hassle-free and easy methods to apply for a new chequebook. When you log in to the internet banking account of your home bank, you can request for a cheque book by mentioning certain details like account number and mailing address. In most cases, the cheque book is delivered to the residential address or the address that is linked with the bank account.
- ATM: Did you know that you can apply for a cheque book easily at an ATM? This is a simple process and one of the fastest ways to get your chequebook. Below is the stepwise process that tells you how to apply for a chequebook through an ATM:
- Go to your bank ATM and insert your debit card
- Proceed to enter your pin and select the ‘issue new cheque book’ option
- Click on submit.
- Your request will be submitted and your chequebook will be mailed to your residential address.
- Mobile app: Log in to the mobile app of your bank and apply for a chequebook. This is easy and can be done in a matter of seconds.
FAQs on Cheque
- What is an IFSC code? Is it printed on all cheques?
- What is the purpose of an MICR code on a cheque leaf?
- Where is the MICR number printed on a cheque leaf?
- What is a cheque number?
- When does a bank have a right to refuse to make a payment?
Indian Financial System Code, abbreviated as IFSC, is defined as a 11-digit alphanumeric code that acts as a unique identity for a specific bank branch. Yes. IFSC code is printed on all cheques issued by banks and this code helps in the identification of bank branches and clearing of cheques in an error-free manner.
The 9-digit MICR code is an essential and important feature on all cheques. It helps banks process cheques without any error and in a speedy fashion.
This number is generally printed at the bottom of the cheque. However, this may sometimes vary from bank to bank.
A cheque number is a unique number that is printed on each cheque leaf. This consist of 6-digits.
- 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
Yes. A bank is liable to pay only during working hours.
The bank will be liable for the loss occurred.
The drawer, holder and then banker have the right to cross a cheque.
The Negotiable Instruments Act along with the Reserve Bank of India.
The bank will inform the customer that is the issuer of the cheque, at the earliest and the customer is also entitled to reimbursement.
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