April 26, 2023

What is Blank Cheque & How to Give Blank Cheque: Meaning, Validity, & Leaf

The term “blank cheque**”** frequently refers to a cheque that has been signed by an authorised cheque signer but does not include any additional information like date, payee or amount. In certain cases, it becomes essential to give a blank cheque to someone depending on the requirement or demand.
Now, if you are thinking about whether to give a blank cheque to someone or not, you must check some of the aspects. In the following sections, you will know everything about the blank cheque and how to use a blank cheque if required.

What is Blank Cheque?

The meaning of a blank cheque refers to one that is signed by the issuer without any details. Blank cheque comes with high risk as if lost anyone can easily fill in any amount and issue it to themselves.
Also, you can refer a cheque from a cheque printing company as a blank cheque. These cheques are also referred to as cheque stock and it is necessary to keep them in a safe and secure manner until they are used for business purposes.

Example of Blank Cheque

Now that you are aware of blank cheque meaning, let’s consider an example for understanding the scenario of a pre-signed bank cheque in detail.
Suppose, in a small business the owner is only an authorised signer. The office manager will take charge while the owner goes on a brief vacation. The owner gives his manager three company cheques with only the owner's signature in case of any payment needs. In essence, the owner has faith in the office manager's ability to only process these cheques for a legitimate business transaction. However, sometimes it may not happen. Someone else could find the signed cheque and fill them out with any name and amount they want.

What are the Features of a Blank Cheque?

As a whole, a blank cheque is quite risky. It is important to be aware of its features. Here is a list of certain features that you must remember.
  • You can sign it, only if necessary.
  • A written order is given to your bank to withdraw a specified amount from your account on specially printed paper.
  • The cheque does not have any information related to the date, name or amount.
  • It is a negotiable financial instrument unless otherwise indicated.
  • You can define the limit on the cheque.
  • If you don't want to pay someone, there is no need to sign it.

What is the Blank Cheque Validity?

If you failed to mention a date in a blank cheque it can signify that any individual can use it at any point in time after filling in the date. Therefore it is necessary to mention a date, however, as per the RBI guidelines cheque validity time is only 3 months. Prior to April 2012, a cheque was valid for 6 months.
Under the RBI guidelines, a blank cheque would attract in violation of Section 139 of the Negotiable Instrument Act.

How to Issue a Blank Cheque?

To understand the circumstances, there are three types of scenarios to refer to.
If you want to give a blank cheque as proof, then it is necessary to issue it by
  • Don’t sign the blank cheque.
  • Cancel it without signing it and write the word “Cancelled” between two parallel lines.
  • Also, ensure that the lines of cheque used for NEFT and RTGS should not cover any of the information.
If you to use a blank cheque out of faith or love, then you can issue it by
  • Sign the blank cheque
  • Specify the amount limit like "Not over ₹20,000".
  • You can just make an account payee.
In the event of a loan, when a blank cheque is utilised for security purposes
  • You can give your blank cheque, to companies and societies in case you want a loan or an advance.
  • You can also sign the blank cheque and specify the amount limit.
  • You should only give it to the person you have high faith or trust in.

Why Blank Cheque is Needed During the time of Applying for a Loan?

Here are some of the notable reasons to offer a blank cheque while applying for a loan.
  • It is needed to evaluate the authenticity of the signature of the potential borrower. For lending institutions, it is necessary to extract all information related to whom the loan is given, which bank which the borrower has an account with, and many more.
  • The lending institution also assesses the IFSC number present in the cheque.

Final Word

A cheque reflects various information about your bank, such as cheque number, MICR code, and IFSC code. Therefore, issuing a cheque signifies that you authorise someone to transact with your account. In this regard, issuing a blank cheque holds risk and can be hazardous if someone fills any amount and issues it to themselves. Refer to the above sections to get a detailed idea about blank cheque, their features, usage and when to use one.

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

SBI ATM PIN Generate

- Do you need to swipe your debit/credit card at PoS? - Do you need to withdraw cash at an ATM? - Do you need to access your netbanking account? - Do you need to order a new cheque book, stop payment of a cheque or change your coordinates ( email id, phone number, mailing address)? In all these scenarios, you need to generate a PIN- a four digit number, a security code for identifying you and verifying your financial transaction. Without the PIN, you will not be able to access your debit/credit card or withdraw cash from an ATM. Let us take an empirical example of SBI ATM PIN. This 4-digit code can be generated for both new and existing account holders of SBI through various banking channels such as: - Green PIN - SMS Banking - Customer care - Netbanking1. Green PIN- code generation To generate the 4- digit code via the Green PIN channel, you need to follow a series of simple steps: - Drop by to your closest SBI ATM and select the PIN generation tab on the screen. - Now type your 11 digit account details, followed by your registered mobile number and click on the ‘confirm tab. - Another screen opens up, acknowledging you for becoming a part of this green initiative. - You will then receive a validation message, once the PIN has been generated. - Subsequently, an OTP would be sent on your registered mobile number carrying a validity of 2 days. - Finally, with the OTP details, just drop by the nearest ATM and press the ‘Banking>PIN Change’ option and type the OTP details.

IMPS vs. NEFT: Key Differences And Benefits

If you use electronic payment systems, you should be familiar with IMPS and NEFT. Both of these are strategies for moving money from one bank account to another. Understanding how each of these methods of money transfer works might help you choose the best approach for your needs. Let's go over these methods in depth!

Andhra Bank Balance Enquiry Phone Number & How to Check it Online

Balance enquiry is one of the most frequently used banking services. To provide simple and convenient banking services to customers by leveraging technology, Andhra Bank launched a missed call facility on the Andhra Bank balance enquiry number. This facility is available 24X7 and is free of cost. However, there are other ways with which you can check the account balance. For more details, read on.

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.