Presentation on the topic “Cheque” -by Prabin shrestha

Meaning and definition Written order issued by a depositor to his bank to pay a specified sum to the holder or named person or company on demand. Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument Cheque book is issued to the depositor after opening the bank account and the depositor can use the cheque to withdraw the deposited amount from his account . So, it is the written order slip issued by the depositor to the concerned bank to pay the stated sum to the bearer or the individual/organization whose name appears on it.

Parties Involved in Cheque Drawer: a drawer is the person or party who writes the cheques for the purpose of payment. The drawer is the depositor who orders the bank to specified amount to the person or organization specified in cheques. Drawee: the bank to which cheque is written is called the drawee. The drawee is responsible for payment of cheque amount in accordance with the instructions of drawer if the rules of the drawing cheque is completed. Payee: The payee is the party to whom the cheue amount is paid by the bank.

Essentials of a Cheques A cheque must be in writing. The writing may be by the means of a pen, typewriter, printed characters, ball pen or even pencils because law has not specified the writing materials with which a cheque has to be written. The order must be unconditional. if any condition is attached with the order then the cheque will lose the legality. The payment must be made to a certain person, bearer or self. It must be drawn on a banker. It must be signed by the account holder.

Types of cheques Bearer cheque Order cheque Crossed cheque General Crossed Cheque Special Crossed Cheque

Bearer Cheques: Amount specified in the cheque is paid to any one who submits the cheque in the bank for payment. Regarded as the most unsafe type of cheque as the payment may go to the wrong person. Under this cheque bank does not ask any specific identification.

Order cheque Amount stated in the cheque is paid only to the person specified in the cheque. This type of cheque is safer as the bank generally ask for identification of the person whose name is written on the cheque before payment. Person whose name appears on it should sign at the back of cheques for realizing the payment from the bank. Signing at the back of the cheque is called endorsement of cheque. The endorse cheque is negotiable .

Crossed Cheque Special type of cheque which is written by following some special instruction of crossing. The payment of such cheque is not made to the person the cheque into bank rather is deposited into the bank account of the payee. After the deposit in payees account the payee can use his/her own cheque to withdraw the amount. Purpose of issuing such cheque is to avoid the payment to wrong person or party. Safest means of cheque as the person cannot encash the cheque

a. General crossed cheque Under this cheque the name of the bank is not specified in which the amount is deposited. In general crossed cheque two lines parallal on the left top of the cheque is drawn The drawee bank simply makes payment on this cheque on behalf of payee to the bank of payee.

b) Special Crossed Cheque Under this cheque the name of the payee’s bank is specified from where the amount can be collected. The name and address of payee’s bank is written within the crossing line and the drawee bank only makes payment in the payee’s account of specified bank mentioned in the crossing.

Dishonour of cheque/rules for drawing a cheque There must be a correct and clear specification of date on the cheque. The date of the cheque should not cross the time period specified by the bank. The amount of cheque should be written both in words and figure and they should exactly match. The signature of the account holder must be correct and clear and should be matched with the specimen of signature provided to bank at the of opening bank account. The name of the payee should be written clearly and the payee should also sign at the back of cheque. The date, name of payee, amount in words and figure and signature of the account holder should not be overwritten.

Contd.. The cheque should be written in a single language either in nepali or English or others. There must be sufficient balance in bank account before writing a cheque. If anything has to be corrected, the accountholders must have to sign in the place where such correction has been made.

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