What Is Cross Cheque Learn About Types of Crossing Cheques & Its Importance

It is generally best to place it in the upper left corner of the cheque. The importance of this crossover is that the cheque payment can only be issued by a banker. From above image, you notice how to change the normal cheque leaf into crossed cheque. https://1investing.in/ Once you cross the cheque and mention the payee name (in above example, it is my name) then I can only encash this cheque by depositing to my Bank Account. However, do remember that in crossed cheque payee is free to make a further endorsement.

The assembling banker is guilty of carelessness if he credits the return of a cheque with such a crossing to the other account. He will also be ineligible for the assembling banker’s protection under section 131 of the Act. Such crosses, on the other hand, do not affect the paying banker. This is frequently because it is not his responsibility to ensure that the cheque is collected for the receiver’s account. When you receive a crossed cheque, you need to endorse it on the back with your signature to deposit it into your bank account.

  1. Traveller’s cheques do not expire and can be used for future trips.
  2. Such crosses, on the other hand, do not affect the paying banker.
  3. In case this cheque is misplaced, lost, or stolen it cannot be misused.
  4. This form of crossing has the consequence of funding the cheque exclusively to the intended recipient.

The meaning of cross-cheques in India is similar to the meaning of cheques in other countries. Aman is not a holder in due course because the title of the cheque is tainted as it was stolen. The person who transferred the cheque to him was not the real owner of the cheque. Also, he will not be eligible for the protection to the collecting banker under section 131 of the Act. Although the payee can’t uncross a check, the payer can do so by writing “Crossing Canceled” across the front of the check.

Nevertheless, the experts do not advise this move because it removes the payer’s original security. The issuing party is called the drawer of the cheque, and the one it is issued to or put simply, whose name is mentioned on the cheque is the drawee. We offer a variety of current/cheque accounts, fixed deposits and savings account designed to suit your personal banking needs. A cheque’s expected validity is three months from the day it is written.

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Vakilsearch is India’s largest provider of legal, secretarial, accounting, and compliance services. We have successfully worked with over 5 lakh customers, and have now registered over 10% of all the companies registered in India. Only if the title of the transferor is good, the title of the transferee is also good. Hence, in case of any taint in the title of any one of the endorsers, the title of all the subsequent transferees also becomes tainted. But, Not Negotiable Crossing takes away this important feature.

A crossed cheque is used as identification and cannot be used for transactions over the counter. The check can be crossed in a variety of ways, each with its own set of consequences. The most basic method of crossing is to draw two parallel lines across the cheque’s face.

History of the Cross Cheque

To make successful cheque transfers, the issuer must have an account, whether it’s a savings or a current account, with a certain banking institution. In conclusion, crossed cheques are an important financial tool that provides enhanced security and protection against fraud as compared to open cheques. Open cheques are great for a quick access to funds but are not a safe option as it can be easily misused. Whereas, a crossed cheque by restricting encashment and ensuring direct crediting to the payee’s account, offers security. Utilize this secure payment instrument to safeguard your financial interests and keep your transactions hassle-free.

Cross Cheque Meaning

The general direction of a cheque is referred to in this manner. The instruction provided above defines the amount claimed in the Cheque would be deposited immediately into the account of the Cheque bearer under Section 123 of the Negotiable Instruments Act, 1881. It will not be provided to the bearer in cash over the bank counter right away. A cheque is a unilateral contract for transferring money from one account to another, and you can cross it in a variety of ways. Cheque crossing gives safety and assurance to both the signed person of the cheque and the beneficiary. It also aids the drawers and bank in locating the recipient.

It’s collectible over the counter on a presentation by the receiver to the paying banker. Varieties of cheque crossing are General Crossing, Special Crossing, and Restrictive Crossing. A crossed cheque could be a cheque that has been marked specifying an instruction on the method it’s to be saved. A crossed check is any check that is crossed with two parallel lines, either across the whole check or through the top left-hand corner of the check.

However, we can negotiate a crossed bearer cheque by delivery and a crossed order cheque by endorsement and delivery. Usually, you will find three types of entities involved in cheque transactions. Before proceeding further, first let us understand the parties involved in cheque transactions. There are mainly three parties involved in cheque transactions and are as below.

A crossed check can safeguard against fraud if it falls into the wrong hands because it can’t be immediately cashed. Anyone who’s stolen the check creates a line of evidence pointing to their identity when they deposit it into an account that they have access to. This can be particularly advantageous if crossed cheque image the check is written for a large amount of money. This type of cheque crossing indicates that the amount cannot be paid into any bank account other than the one specified on the check. This type of crossing assures that the funds are only moved to a bank account and not supplied in the form of cash.

Because the collecting bank handles the cash, this provides a measure of protection to the payer. You may have observed cheques with two sloping parallel lines with the words ‘a/c payee’ written on the top left. These cheques are relatively safe because they can be encashed only at the drawee’s bank.

In India, crossed cheques are used mostly for commercial transactions such as buying and selling goods or making payments for services. One bank verifies the authenticity of a deposit made by another bank. Cross checks help to prevent money laundering and other illegal activities. Cross cheques are also used to redeem deposits with the banks.

The effect of this kind of crossing is that the cheque needs to be funded only to the banker that it has been crossed. It is a reminder to all of the people that a special crossing would not be changed into a general crossing. One can consider the cheque as an open cheque when the crossing is missing.

If payment not done, then it is called “cheque dishonored”. A bearer cheque is the one in which the payment is made to the person bearing or carrying the cheque. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued the payment to. The banks need no other authorisation from the issuer to be allowed to make the payment. In banking terms, a negotiable instrument is a document that promises its bearer a payment of the specified amount either on furnishing the document to the banker or by a given date.

It is located in the upper left-hand corner or vertically across the cheque. Two or more sentences may be fixed within the lines, such as ‘and company’ or ‘not negotiable.’ Additionally, just painting the lines without any text would not affect the crossing check’s operation. It is payable over the counter on presentment by the payee to the paying banker. While a crossed cheque is not payable over the counter but shall be collected only through a banker. The amount payable for the crossed cheque is transferred to the bank account of the payee. Types of cheque crossing are General Crossing, Special Crossing and Restrictive Crossing.

A crossed cheque can only be deposited into the payee’s account. In case this cheque is misplaced, lost, or stolen it cannot be misused. Crossed cheque is a financial instrument that enables two or more banks to transfer funds between themselves. The cheque is drawn on one bank, payable to the bearer, and deposited with the second bank. The cheque can then be used as a means of transferring funds between the two banks.

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