A cheque is an unconditional written order, bearing date to the banker from the drawer, where maintaining his account to pay on demand a certain specified sum of money expressed in both figures and words, to the named person or his order or bearer.
According to sec-6 of Negotiable Instrument Act (NIA)-1881- A cheque is a bill of exchange drawn upon a specified banker and not expressed to be payable otherwise than on demand.
Parties in a Cheque: There are 3 (Three) parties in a cheques: 1) The drawer - Customer, Account holder, who issue the order. 2) The Drawee - The Banker, on whom the order is issued. 3) The payee - Beneficiary of a cheque who is to receive the payment.
Characteristics of a cheque:
1) Written order
2) Unconditional order.
3) Order on a banker where the drawer maintains his account.
4) Signature & Date.
5) Specified payee- Person or to bearer.
6) Specified amount both in figure & words.
7) Specified 3 (Three) parties - Drawer, Drawee & Payee.
8) Printed format.
9) Payable in legal tender currency.
10) Presentation for payment.
Issuance of Cheque Book:
The deposit accepted by the Banker should be withdrawable by cheque. Withdrawals is allowed by effecting remittances or by book transfer under written instruction of the Account holder.
Though, it seems, to issue a cheque book is an easy task, but various risks are involved The concerned officer have to be more careful and conscious while issuing a Cheque book and remember the prerequisite conditions before issuing a cheque book.
Prerequisite conditions for issuing a cheque Book:
The concerned officer of the branch has to ensure himself about some information which are as follows:
1. First of all, whether the account holder bears the copy of letter of thanks or not. This letter endures the correctness of client’s address.
2. signature of the account holder on the cheques book requisition slip is verified by the authorized officer of the branch.
Formalities to be observed while issuing a cheques book:
While issuing a cheque book the following formalities to be observed:
1. There should be a request from the account holder for issuing cheque book after opening of an account. Subsequent cheque books should be issued only on the strength of the requisition slip only, signed by the account holder as attached to the cheque book.
2. Branch Stamp should be affixed on each leaf of the cheque book with initial of the authorized officer.
3. Writing name of the account holder and his account number on the face/cover page of the cheque book.
4. Writing the name of the account holder, account number, date of cheque issue on the requisition slip attached to the cheque book.
5. If the requisition slip is reportedly lost or destroyed by the account holder, the loss is noted on the banker's record.
6. Cheque book will be issued only by an authorized officer.
7. Account number should be noted on each cheque leaf which is essential for identification of the concerned account easily as well as precaution against fraudulent use of cheque on any other account.
8. Immediately after issuance of a cheque book, its number should be noted in the ledger page of the account/computer against the account be authenticated by an officer.
Delivery of cheque Book:
Before delivery/handing over the cheque book, following steps to be taken:
1. To enter the cheques book in the cheques issue register. The cheque book issue register has the following columns which must be filled in properly.
Identification of the client who wants to take delivery of the cheque book, whether the receiver of the cheque book is the account holder himself or bearer. In case of bearer, signature of the bearer must be taken on the back page of requisition slip, which must be attested/verified by the account holder.
Payment of Cheque:
Checking points for payment of cheque:
Cheque is payable on due presentation for payment if it is:
a) Issued from the payee Branch.
b) Duly signed by the drawer.
c) Sufficient credit balance in the account.
d) Presented within the stipulated time of banking hour.
e) The cheque is not post dated/stale.
f) The amount in figure and word does not differ.
g) If the signature in the cheques does not agree with that of Signature card.
h) If the cheque is mutilated.
i) If there is material alteration in the cheque.
j) in case of customers death or if the customers died.
k) If the cheque is account payee one.
l) If the account is marked "Stop Payment" or "Gamishee Order" received from the court.
In the event of dishonor of a cheque due to a reason other than valid one, the drawee banker is liable to the drawer for any loss or damage caused thereby as per section 85(1) of NIA.
Passing, means cheques rotate or cross through ledger or computer by an authorized officer of the bank.
Lost & Cancellation of Cheque Book:
Lost:
Incase of loss of cheque book or a leaf thereof, client must have to inform the same to the Bank in written along with a copy of General Dairy (GD). Authorized officer should mark stop payment in the ledger/computer without delay.
Cancellation:
Cancellation means striking out so that it can not be used fluffier. Cancellation must be made by an authorized officer and it is marked from the top to bottom of a cheque.
Procedure of Payment of Cash:
Checking point:
a. Whether the cheque is open or not.
b. Branch Name.
c. Signature, date, amount
d. Obtain signature of bearer
e. Enter the particulars in the token register.
f. Provide token to the bearer
Computer/Ledger Keeper:
a. Checking particulars of cheque.
b. Checking particulars of the Account.
c. If right, posted in the ledger/computer.
d. Affixed posted stamp and put signature.
Cheque passing/checking official:
a. Checking particulars of cheque.
b. Checking posting mark.
c. Checking signature of Account holder.
d. If right, cancelled the signature of cheque.
e. Affixed "pay cash" stamp.
f . Hand over the cheque to paying cashier for payment.
Paying Cashier:
a. Check particular of cheque.
b. Cheque "Posted" stamp signature of Computer operator.
c. Signature of cancellation officials and "Pay cash" stamp.
d. Call back the token foil.
e. Obtain signature of bearer on the back of cheque and tally if.
f. If this ok affixed "cash paid" seal.
g. Pay the amount to its holder
h. Noted the amount of denomination on the back of the cheque.
i. Enter the particular in the paying register.
Note: In case of one stop service all checking formalities will be done at the same counter.
Material Alteration:
Any kind of material alteration must be authenticated by the drawer of the cheque by putting a complete signature similar to the previous one given by the account holder i.e. of change issuer.
Stop Payment of cheque:
Account holder may stop. payment of the cheque issued by him. "Stop payment of cheque” instruction means stopping payment by the bankers which may come from cheques maker through written application or telephonic message if acceptable to the bank.
Reasons behind stop payment of cheques:
Generally, the following reasons are responsible for stopping payment of cheque:
1. Direction comes from the account holder for stop payment.
2. Any notice received regarding lost or stolen of cheque.
3. Injunction imposed by the court/tax office to stop transaction of any account.
4. Notice received regarding death of account holder.
I hope this article about cheque book will help every banker.
According to sec-6 of Negotiable Instrument Act (NIA)-1881- A cheque is a bill of exchange drawn upon a specified banker and not expressed to be payable otherwise than on demand.
Parties in a Cheque: There are 3 (Three) parties in a cheques: 1) The drawer - Customer, Account holder, who issue the order. 2) The Drawee - The Banker, on whom the order is issued. 3) The payee - Beneficiary of a cheque who is to receive the payment.
Characteristics of a cheque:
1) Written order
2) Unconditional order.
3) Order on a banker where the drawer maintains his account.
4) Signature & Date.
5) Specified payee- Person or to bearer.
6) Specified amount both in figure & words.
7) Specified 3 (Three) parties - Drawer, Drawee & Payee.
8) Printed format.
9) Payable in legal tender currency.
10) Presentation for payment.
Issuance of Cheque Book:
The deposit accepted by the Banker should be withdrawable by cheque. Withdrawals is allowed by effecting remittances or by book transfer under written instruction of the Account holder.
Though, it seems, to issue a cheque book is an easy task, but various risks are involved The concerned officer have to be more careful and conscious while issuing a Cheque book and remember the prerequisite conditions before issuing a cheque book.
Prerequisite conditions for issuing a cheque Book:
The concerned officer of the branch has to ensure himself about some information which are as follows:
1. First of all, whether the account holder bears the copy of letter of thanks or not. This letter endures the correctness of client’s address.
2. signature of the account holder on the cheques book requisition slip is verified by the authorized officer of the branch.
Formalities to be observed while issuing a cheques book:
While issuing a cheque book the following formalities to be observed:
1. There should be a request from the account holder for issuing cheque book after opening of an account. Subsequent cheque books should be issued only on the strength of the requisition slip only, signed by the account holder as attached to the cheque book.
2. Branch Stamp should be affixed on each leaf of the cheque book with initial of the authorized officer.
3. Writing name of the account holder and his account number on the face/cover page of the cheque book.
4. Writing the name of the account holder, account number, date of cheque issue on the requisition slip attached to the cheque book.
5. If the requisition slip is reportedly lost or destroyed by the account holder, the loss is noted on the banker's record.
6. Cheque book will be issued only by an authorized officer.
7. Account number should be noted on each cheque leaf which is essential for identification of the concerned account easily as well as precaution against fraudulent use of cheque on any other account.
8. Immediately after issuance of a cheque book, its number should be noted in the ledger page of the account/computer against the account be authenticated by an officer.
Delivery of cheque Book:
Before delivery/handing over the cheque book, following steps to be taken:
1. To enter the cheques book in the cheques issue register. The cheque book issue register has the following columns which must be filled in properly.
Date of cheque Issue
|
Series
|
Title of Account
|
Account Number
|
Signature of receiver with date
|
Signature of issuing officer
| |
From
|
To
| |||||
Identification of the client who wants to take delivery of the cheque book, whether the receiver of the cheque book is the account holder himself or bearer. In case of bearer, signature of the bearer must be taken on the back page of requisition slip, which must be attested/verified by the account holder.
Payment of Cheque:
Checking points for payment of cheque:
Cheque is payable on due presentation for payment if it is:
a) Issued from the payee Branch.
b) Duly signed by the drawer.
c) Sufficient credit balance in the account.
d) Presented within the stipulated time of banking hour.
e) The cheque is not post dated/stale.
f) The amount in figure and word does not differ.
g) If the signature in the cheques does not agree with that of Signature card.
h) If the cheque is mutilated.
i) If there is material alteration in the cheque.
j) in case of customers death or if the customers died.
k) If the cheque is account payee one.
l) If the account is marked "Stop Payment" or "Gamishee Order" received from the court.
In the event of dishonor of a cheque due to a reason other than valid one, the drawee banker is liable to the drawer for any loss or damage caused thereby as per section 85(1) of NIA.
Passing, means cheques rotate or cross through ledger or computer by an authorized officer of the bank.
Lost & Cancellation of Cheque Book:
Lost:
Incase of loss of cheque book or a leaf thereof, client must have to inform the same to the Bank in written along with a copy of General Dairy (GD). Authorized officer should mark stop payment in the ledger/computer without delay.
Cancellation:
Cancellation means striking out so that it can not be used fluffier. Cancellation must be made by an authorized officer and it is marked from the top to bottom of a cheque.
Procedure of Payment of Cash:
Checking point:
a. Whether the cheque is open or not.
b. Branch Name.
c. Signature, date, amount
d. Obtain signature of bearer
e. Enter the particulars in the token register.
f. Provide token to the bearer
Computer/Ledger Keeper:
a. Checking particulars of cheque.
b. Checking particulars of the Account.
c. If right, posted in the ledger/computer.
d. Affixed posted stamp and put signature.
Cheque passing/checking official:
a. Checking particulars of cheque.
b. Checking posting mark.
c. Checking signature of Account holder.
d. If right, cancelled the signature of cheque.
e. Affixed "pay cash" stamp.
f . Hand over the cheque to paying cashier for payment.
Paying Cashier:
a. Check particular of cheque.
b. Cheque "Posted" stamp signature of Computer operator.
c. Signature of cancellation officials and "Pay cash" stamp.
d. Call back the token foil.
e. Obtain signature of bearer on the back of cheque and tally if.
f. If this ok affixed "cash paid" seal.
g. Pay the amount to its holder
h. Noted the amount of denomination on the back of the cheque.
i. Enter the particular in the paying register.
Note: In case of one stop service all checking formalities will be done at the same counter.
Material Alteration:
Any kind of material alteration must be authenticated by the drawer of the cheque by putting a complete signature similar to the previous one given by the account holder i.e. of change issuer.
Stop Payment of cheque:
Account holder may stop. payment of the cheque issued by him. "Stop payment of cheque” instruction means stopping payment by the bankers which may come from cheques maker through written application or telephonic message if acceptable to the bank.
Reasons behind stop payment of cheques:
Generally, the following reasons are responsible for stopping payment of cheque:
1. Direction comes from the account holder for stop payment.
2. Any notice received regarding lost or stolen of cheque.
3. Injunction imposed by the court/tax office to stop transaction of any account.
4. Notice received regarding death of account holder.
I hope this article about cheque book will help every banker.
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