April 26, 2023

What is Bankers Cheque?

  • As a creditor, are you worried whether your customer's cheque may bounce?
…..and that you will have sleepless nights?
  • What if you have to make some payment to the vendor and you don't have the beneficiary's relevant banking details?
For example, you only have the vendor's company name and address and the amount to be remitted.
When it comes to money matters, we all seek safety and validity of payment more than anything else, isn't it?
In all these situations, the banker's cheque or banker's draft or pay order is your 'go to' option.

Definition of a banker's cheque

To put simply, the bank issues this type of cheque on your behalf, which is drawn from its own funds ; whilst the customer pays the bank the amount either as cash or allows the bank to debit the corresponding amount from its account.
Once the bank has written the cheque, only then the amount is remitted to another entity, thus eliminating the scope of a cheque bounce.
Since the banker's cheque is issued by the bank itself, it is a non-negotiable instrument with zero credit risk and is valid for a period of three months and is typically processed within 24 hours after it has been deposited.

Key features of a banker's cheque

  • Issued by the bank itself
  • The corresponding amount is either paid as cash to the bank or the amount is debited from the customer's account.
  • Non- negotiable instrument
  • Valid for three months; option to revalidate the cheque once in 365 days.
  • Zero credit risk
    Other nuances of banker's cheque are:
  • Name of the issuing ban
  • Payee's name - Amount to be remitted in words and numbers.
  • Printed signature of the cashier or senior signing bank executive
  • Authentication features watermark,security thread, colour-shifting ink and a special bond paper.
  • These cheques can be processed in any branch of the same bank within the city.
  • Therefore, banker's cheques have limited teritorial access.

Proforma of a Bankers Cheque:

Image to be sent
In addition to a banker's cheque, there are other types of cheques issued by banks for varying customer requirements.

Let us understand in detail the nuances of different types of cheques available within the banking ecosystem.

Different types of cheques:

  • Self cheque
    • Account payee cheque
    • Open cheque
    • Travellers cheque
    • Bearer cheque
    • Pay yourself cheque ( PDC)
    • Others- outstation cheque, at par cheque etc.
Before we get into the nuances of each cheque type, we need to appreciate that the overarching principle of using cheques versus other transaction channels is that cheques provide us the 'proof of payment', the records of which are maintained in the bank, physically and digitally.
  • Self-Cheque
As the name indicates, the drawer of the cheque is also the drawee, or the remitter is the same person or entity as the beneficiary. For example, when you need cash , you can write cheque as 'self' to withdraw funds from your account. An important caveat is to keep such cheques safely as it can lead to unauthorised withdrawal from your bank account, if anyone lays their hands on a ' self' signed cheque.
  • Account Payee Cheque
In this type of cheque, it strikes parallel lines on the top left corner of the cheque and then writes the payee or the beneficiary's name and amount. By doing so, the funds would only get transferred to that specific beneficiary's account ensuring a safe and secured mode of transfer.
  • Open Cheque
A cheque without any parallel lines drawn on the topmost left corner is called an open cheque or an uncrossed cheque. One can clear this cheque at any bank and the payee/beneficiary can encash the amount mentioned on the cheque. This type of cheque is transferable from the original beneficiary to another. The payer/issuer of the cheque is required to put his/her signature on the front and rear side of the cheque.
  • Traveller’s Cheque
When trotting around the globe, the traveller's cheque comes as handy as you can encash these cheques for your overseas travel rather than carrying physical money in your wallet.
Such cheques are issued by a bank in one country which can be cleared by another bank in another country in the relevant currency.
Traveller's cheques do not have an expiry date and can be utilised for travel purposes at a later date.
  • Bearer Cheque
In this type, the word bearer is printed on the cheque. The bearer or the carrier of the cheque can encash the amount when he/she presents this type of cheque to the bank.
The bank requires no other validation or authentication to clear this type of cheque.
As a consequence, the bearer's cheque if misplaced or stolen becomes susceptible to unauthorised access and fraudulent activity.
  • Pay Yourself Cheque
As the name indicates, these cheques are typically used for buying bank drafts, pay orders and fixed deposit receipts.
By simply crossing the cheque, the drawer indicates the bank to debit his/her account to the extent of the amount mentioned on the pay yourself cheque.
  • PDC
Post Dated Cheque is meant to be cleared at some distant date in future. Say for example, the drawer is a tenant and has issued eleven PDCs' which will be encashed by the owner of the apartment, on the specified date each month. PDCs carry a validity of three months.
  • Outstation (multi city cheque)
These cheques can be cleared at any place in the respective bank branch.

Frequently Asked Questions (FAQs):

Q. How can I get a banker's cheque cleared?

The process is fairly simple. All you need to do is to visit any branch of the bank which has issued the cheque within the local city limits. You then have to approach the cheque clearance section of the branch and present your banker's cheque tothem. Upon validation of your details, the bank will hand over the cash to you instantly to the extent of the amount mentioned in the cheque.

Q. Can a banker’s cheque transaction be reversed?

Banker's cheque is a non-negotiable instrument, issued by the bank itself and cannot be reversed. The cheque has to be honoured.

Q. Are there any service charges to be paid for availing a banker's cheque?

Yes, a service charge is applicable which varies in conjunction to the transaction amount.
Say for example**:**A fee of ₹25 is usually charged for an amount of ₹5,000.

Q. How does a banker's cheque differ from a demand draft?

While both are non-negotiable instruments, issued by the bank itself, the demand draft has a wider geographical spread in terms of clearance, implying that you could get your demand draft cleared from any branch of the issuing bank across the country. Whereas, in case of banker's cheque, the cheque encashment is limited within the city of the issuing bank.

Never miss a trading opportunity with Margin Trading Facility

Enjoy 2X leverage on over 900+ stocks

Upstox Margin Trading Facility
Apple Logo
Downloadlogo
iOS App
Google Play Logo
Downloadlogo
Android App

RELATED ARTICLES

NEFT Holidays 2022

Just to simply know about a forthcoming event, gives us a sense of control, sense of preparedness to deal with the event as and when it occurs and some peace of mind, isn't it?. Be it your weekly weather forecast report or monthly sales target or festival holidays or your bank holiday list, knowing the details in advance gives you 'inner peace'. In the context of banking, even though we are in era of digital banking which allows every time, everywhere banking wherein customers can avail services 247365 with just a click, knowing that your bank branch would remain closed on certain days is helpful, is useful to us. Let us take a look at the NEFT holiday list, as a precursor to that, let us understand the concept of the digital banking transaction/payment channel, NEFT (National Electronic Funds Transfer). Introduced in November 2005 by the RBI, NEFT allows retail customers across India to transfer funds electronically from one NEFT bank branch enabled account to either the same or any other bank within India. The NEFT service is available 24x7 ( with effect from Dec 16, 2019 as per RBI guidelines). There is no need to visit the bank branch as NEFT transfers are made through digital channels (net banking and mobile banking) everytime, everywhere, everyone. Besides, the NEFT facility can also be availed for making credit card payments and for payment of loan EMI.

ATM Cash Withdrawal Limits of India's Top Banks

As an individual, it's essential to have access to cash when you need it. One way to do this is through ATMs, which allow you to withdraw money from your bank account anytime, day or night. However, there are limits to how much cash you can withdraw from an ATM in a single transaction or within a certain timeframe. These limits vary from bank to bank and can affect your ability to access the cash you need. In this blog post, we'll be comparing the ATM cash withdrawal limits of some of India's top banks. By the end of this post, you'll better understand ATM cash withdrawal limits.

ICICI NEFT Form

The digital payment wave has swept the Indian banking ecosystem with the sheer rise in the volume of electronic payment transactions across channels such as mobile wallets, PoS terminals, UPI, IMPS!, NEFT, AEPS etc. Just to give you a perspective, the total yearly volume of digital payments across channels has increased from 14.59bn to 71.59bn in 2022, registering a staggering 4.9x rise in volume. Source:www.statista.com Clearly, the value proposition for digital banking customers is too good to ignore , given the speed, safety, seamlessness, of digital banking transaction Against this backdrop, the central regulatory authority, the RBI has outlined the next phase of growth 'Payment Vision 2025' based on the 4Es value proposition of digital banking- E-Payments for Everyone, Everywhere, Everytime. One such digital banking transaction/payment channel is the NEFT, National Electronic Funds Transfer. Introduced in November 2005 by the RBI, NEFT allows retail customers across India to transfer funds electronically from one NEFT bank branch enabled account to either the same or any other bank within India. The NEFT service is available 24x7 ( with effect from Dec 16, 2019 as per RBI guidelines). There is no need to visit the bank branch as NEFT transfers are made through digital channels (net banking and mobile banking) everytime, everywhere, everyone. Besides, the NEFT facility can also be availed for making credit card payments and for payment of loan EMI. For example, let us say you have an active account with ICICI Bank. You can make NEFT payment through the following channels. - Visit ICICI bank branch - Netbanking - iMobile Pay - m.icicibank.com - Pockets app - ICICI bankpay Founded in 1994, the Vadodara headquarters ICICI bank, is one of India's leading private sector player with a strong domestic and international presence through its network of 5,275 branches and 15,589 ATMs across India and footprints across 17 countries worldwide. The bank had consolidated asset base of ₹16.8 lakh crore (as on December 31, 2021). Let us take a deeper look at the nuances of NEFT transaction steps via digital payment channels such as netbanking and mobile banking. For starters, you need to add a beneficiary account details and always ensure that accounts of payee and beneficiary are in active state.

Canara Bank Timings: Working and Lunch Timings for Today and Saturday

Canara Bank timings are different for different services and different branches. However, most of the branches are open from Monday to Friday, 10:00 AM to 3:30 PM and Canara bank timings on Saturday are from 10:00 AM to 3:30 PM. Second and Forth Saturday of the month the bank is closed. Bank is also closed on all Sundays, national holidays, and gazetted holidays. Some of the branches have extended hours on certain days of the week. However, some branches open at 9:00 AM or close at 5:00 PM, it will vary depending on the location and the demand of the services in that area. Canara Bank's online banking services and Canara Bank's mobile banking services are also available 24/7, customers can access their account information, make transactions, pay bills and more from the comfort of their home or office. The bank's customer service is also available during the Canara bank working timings, customers can call the customer service hotline or visit the bank's website for assistance with any queries or issues they may have. It's worth noting that Canara Bank timings branches and services may be subject to change due to COVID-19 and the bank may have different timings for its branches based on the local regulations. Therefore, it's recommended to check the timings of the branch you're planning to visit before visiting it, to ensure that the branch is open and available during the time you plan to visit.