A cheque can feel challenging to write in today’s digital age, but they still continue to be a trusted method for many types of transactions. Understanding how to properly fill a cheque ensures that your payments are processed without issues, maintaining the reliability and security that cheques are known for.
What is a cheque?
A cheque is a written order directing a bank to pay a specific sum of money to a named person or entity. Cheques are governed by the Negotiable Instruments Act, 1881, in India. They provide a secure way to transfer funds and are widely used for both personal and business transactions.
What are the parts of a cheque?
1. Date: The day on which the cheque is issued.
2. Payee’s name: The name of the person or entity receiving the payment.
3. Amount in figures: The payment amount written in numbers.
4. Amount in words: The payment amount written in words to avoid ambiguity.
5. Signature: The account holder's signature, authorising the bank to process the payment.
Different types of cheques
1. Bearer cheque: It is payable to anyone who presents it to the bank. These cheques may not specify the payee’s name and can be cashed by anyone bearing it.
2. Order cheque: It is payable only to the person named on the cheque. The payee needs to endorse the cheque before depositing it into their account.
3. Crossed cheque: Marked by two parallel lines on the top left, often with ‘a/c payee’ between the lines. It can only be deposited into the payee’s account.
4. Post-dated cheque: Contains a future date and cannot be cashed until that date. Used for future payments like loan EMIs or scheduled payments.
How to fill a cheque
1. Write the date: In the format DD/MM/YYYY, on the top right-hand corner.
2. Payee’s name: Write the name of the person or entity you are paying on the line that says, ‘Pay to the order of’.
3. Amount in figures: In the box on the right-hand side, write the amount you wish to pay in numbers.
4. Amount in words: Below the payee’s name, write the amount in words starting with ‘Rupees’ and end with ‘only’. For example, ‘Rupees Five Thousand Only’.
5. Signature: Sign the cheque at the bottom right-hand corner. This authorises the bank to process the payment.
Best practices while writing a cheque
1. Accuracy: Double-check all entries for missed errors (if any).
2. Security: Keep cheques in a safe place and never sign blank cheques.
3. Record-keeping: Maintain a record of all issued cheques in the cheque book’s index section.
4. Timeliness: Ensure sufficient funds are in your account before issuing a cheque to avoid penalties.
5. Voiding unused cheques: Void unused cheques by writing ‘VOID’ across the face to prevent misuse.
Advantages and disadvantages of using a cheque
Advantages
- Security: Cheques can be traced and offer a secure mode of payment.
- Convenience: No need to carry large amounts of cash.
- Flexibility: Post-dating allows for future payments.
Disadvantages
- Processing time: Cheques take time to clear.
- Risk of bouncing: Insufficient funds or incorrect details can lead to bouncing of a cheque and penalties.
Also Read: What is a Savings Account and how does it work?
Conclusion
Understanding how to fill out a cheque correctly ensures smooth and secure transactions. By following the steps and best practices, you can effectively manage your payments using cheques. For a seamless banking experience, consider using Axis Bank's internet banking services. With features like easy fund transfers, detailed account views, and the ability to request cheque books and other services online, Axis Bank's internet banking makes managing your finances convenient.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
