Banking Awareness 2017 Inward Uncomplicated Linguistic Communication – Lesson 14

Dear Gr8 Ambitionists, inwards our previous Banking Awareness 2017 Lesson 13, nosotros have got learnt nearly the Charging of Securities. In today’s lesson, nosotros shall acquire nearly Cheque as well as Demand Drafts. Happy Reading ๐Ÿ™‚

Banking Awareness: Cheque as well as Demand Draft

History of Cheques inwards India  

The depository fiscal establishment check was introduced inwards Republic of Republic of India past times the Bank of Hindustan. In 1881, the Negotiable Instrument Act was enacted inwards India. The NI human activity provides a legal framework for non-cash payment instruments inwards India. Until 1 Apr 2012, cheques inwards Republic of Republic of India were valid for vi months from the appointment of their issue, but directly RBI issued a notification reducing their validity to 3 months from the appointment of issue.

Cheque & Its Types   

A depository fiscal establishment check is a document that orders a depository fiscal establishment to pay a specific amount of coin from a person’s employment organisation human relationship to the individual inwards whose refer the depository fiscal establishment check has been issued. The four principal items on a depository fiscal establishment check are : 
  1. Drawer : the individual or entity who makes the cheque 
  2. Payee : the recipient of the money. 
  3. Drawee : the depository fiscal establishment or other fiscal establishment where the depository fiscal establishment check tin live presented for payment. 
  4. Amount : the currency amount. 
Important Points to Note
  • In representative of dishonour of depository fiscal establishment check for insufficiency of funds inwards an employment organisation human relationship a courtroom tin punish a individual for 2 years of imprisonment or alongside double fine, if depository fiscal establishment check issued past times drawer returned past times the depository fiscal establishment unpaid. 
  • Now depository fiscal establishment check tin live presented inwards whatever courtroom if it remains unpaid. It is non necessary to nowadays the depository fiscal establishment check inwards the courtroom of same expanse where depository fiscal establishment check is issued. 

Types of Cheques : 

  1. Bearer cheque : When the words “or bearer” appearing on the aspect upwardly of the depository fiscal establishment check are non cancelled, the depository fiscal establishment check is called a bearer cheque. This depository fiscal establishment check is payable to the individual specified therin or to whatever other else who presents it to the depository fiscal establishment for payment. However such cheques are risky, this is because if such cheques are lost, the finder of the depository fiscal establishment check tin collect payment from the bank. 
  2. Order depository fiscal establishment check : When the discussion “bearer” appearing on the aspect upwardly of a depository fiscal establishment check is cancelled as well as when inwards its house the discussion “or order” is written on the aspect upwardly of the cheque, the depository fiscal establishment check is called an fellowship cheque. Such a depository fiscal establishment check is payable to specified individual later on identification therin every bit the payee, or to anyone else to whom it is endorsed (transferred). 
  3. Uncrossed / Open depository fiscal establishment check : When a depository fiscal establishment check is non crossed, it is known every bit an “open cheque” or an “uncrossed cheque”. The payment of such a depository fiscal establishment check tin live obtained at the counter of the bank. An opened upwardly depository fiscal establishment check may live a bearer depository fiscal establishment check or an fellowship one. 
  4. Crossed depository fiscal establishment check / An employment organisation human relationship payee depository fiscal establishment check : Crossing of depository fiscal establishment check agency drawing ii parallel lines on the aspect upwardly of the depository fiscal establishment check alongside or without additional words similar “& Co.” or “account payee” or “Not Negotiable”. A crossed depository fiscal establishment check cannot live encashed at the cash counter of a depository fiscal establishment but it tin alone live credited to the payee’s account. 
  5. Anti-dated depository fiscal establishment check : If a depository fiscal establishment check bears a appointment before than the appointment on which it is presented to the bank, it is called “anti-dated cheque”. 
  6. Post-Dated depository fiscal establishment check : If a depository fiscal establishment check bears a appointment which is withal to come upwardly (future date) as well as therefore it is known every bit post-dated cheque. A post-dated depository fiscal establishment check cannot live honoured before than the appointment on the cheque. 
  7. Stale depository fiscal establishment check : If a depository fiscal establishment check is presented for payment later on iii months from the appointment of resultant the cheque, it is called stale cheque. A stale depository fiscal establishment check is non honoured past times the bank. A self-cheque : It is written past times the employment organisation human relationship holder therefore pay self to have coin inwards physical shape the depository fiscal establishment whatever where depository fiscal establishment has its branch. In a self depository fiscal establishment check whatever individual who holds the depository fiscal establishment check tin remove money.

Various Types of Cheques Based on Their Functionality : 

  1. Gift depository fiscal establishment check : It is a depository fiscal establishment check inwards decorative shape issued for a little extra accuse past times the banks for role past times customers who wishing to plough over presents of coin on particular occasions to their known. 
  2. Traveller’s depository fiscal establishment check : It is an musical instrument issued past times a depository fiscal establishment for remittance of coin from i house to another. Travellers cheques are accepted almost everywhere as well as are available inwards many denominations. Plus, the no expiration characteristic allows you lot to cash inwards leftover cheques or retain them for the adjacent fourth dimension you lot travel.
  3. Bankers depository fiscal establishment check : It is a form of depository fiscal establishment check issued past times the depository fiscal establishment itself connected to its ain funds. 
  4. Local depository fiscal establishment check : A local depository fiscal establishment check is a type of depository fiscal establishment check which is valid inwards the given metropolis as well as a given branch inwards which the issuer has an employment organisation human relationship as well as to which it is connected. If a given city’s local depository fiscal establishment check is presented elsewhere shall attract or therefore fixed banking charges. 
  5. At-Par depository fiscal establishment check : It is a depository fiscal establishment check which is accepted at par at all its branches across the country. Unlike local cheques it tin live presented across the province without attracting additional banking charges.

Demand Draft (DD) 

 A depository fiscal establishment issues a need draft to a client (drawer), directing or therefore other depository fiscal establishment (drawee) or i of its ain branches to pay a for certain amount to the specified party. DD tin alone live payable to a specified political party besides known every bit pay to order. DDs are orders of payments past times depository fiscal establishment to or therefore other bank.

Difference betwixt Demand Draft & Cheque


S. NO
Demand Draft
Cheque
1.
DD doesnโ€™t require a signature inwards fellowship to live cashed.
Cheque requires a signature inwards fellowship to live cashed.
2.
A draft is an fellowship to pay coin drawn past times i component of a depository fiscal establishment upon or therefore other component of a the same depository fiscal establishment for a amount of coin payable to fellowship on demand.
A depository fiscal establishment check is an unconditional fellowship directing the banker to pay for certain amount of coin alone to or to the fellowship of a for certain person.
3.
Draft is issued to anyone every to non-account holder.
The electrical flow a/c as well as saving a/c holder acquire a depository fiscal establishment check facility.
4.
In representative of draft, the drawer is the depository fiscal establishment itself.
In representative of cheque, the drawer is the client of the bank.
5.
Bank charges a nominal fee or committee to resultant a draft.
Bank may non accuse for issuing the chque book.
6.
Draft tin never live dishonoured.
Chqeques tin live dishonoured for diverse reasons.
7.
There is no postulate of clearance if DD is drawn on the same bank.
There is postulate of clearance.
8.
2 parties involved inwards draft transaction : Drawer, Payee
3 parties involved inwards depository fiscal establishment check transaction : Drawer, Drawee, Payee

 

That’s all for directly friends. In our adjacent lesson nosotros shall acquire nearly the Basel Committee. Happy Reading ๐Ÿ™‚

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