Writing a cheque seems to be the easiest thing to do right? For many people, it’s a routine task to do.
But many times people end up writing cheque loosely, which leads to major fraud and cheating. Many such events are being recorded by the banks on a routine basis!
This article will help you to keep the necessary precautions and you will avoid making all the major mistakes while writing a cheque.
Table of Contents
I. Let’s understand the Anatomy of a Cheque.
II. The 5-Steps Checklist while writing your Cheque.
1. Writing the name properly in a cheque.
2. Filling the monetary amount properly.
3. Correct way to sign the cheque.
4. Filling the date in the right way.
5. No overwriting, scribbling or erasing/cutting anything to rewrite.
Let’s understand the Anatomy of a Cheque
Have you wondered HOW the cheques actually get processed? What all information does a cheque consists of, to make it process faster?
Apart from the obvious information such as the name of the person you would like to make a payment, the amount of money in words and in numbers, and the date you wish to issue the cheque. Below is the information a typical cheque usually consists of:
- MICR Code: It is a 9 digit Magnetic Ink Character Recognition Code, it consists of unique characters printed on the cheque and enables faster processing.
- IFSC Code: It is an 11 digit alphanumeric code, used for the online transaction.
- Cheque number: It is a 6-digit number useful in identifying a cheque.
- Account number: It consists of the account number of the issuer of cheque.
A dummy cheque shown below gives the description of everything you see on a cheque.
The 5-Steps checklist while writing your Cheque
1. Writing the name properly in a Cheque
Below are the guidelines to write a name in the cheque in a proper way:
- If the cheque is written for an individual it is essential to include their full name with correct spelling and without long spaces. Long spaces may lead to major frauds.For example, Let’s say you are issuing a cheque to “HARI M.” , but by putting a long space between “HARI” and “M.”, the name becomes: “HARI M” . One can add an additional “S” or “SH” after “HARI” and the name will become “HARIS M.”, or “HARISH M.” respectively and cheque can easily be misused.Therefore, it’s a good practice to leave a smallest space between the names, so that, it become impossible to add any further alphabets.
- If the beneficiary is a company, then you must get the correct information regarding its name to which the cheque is to be issued, it may not be similar to its displayed name!!
Also, it is advisable to mention their full name and not using its acronym, unless clearly given instruction from the beneficiary.
- After writing a name add a RUNNING LINE, as a security to prevent any type of malpractice or exploitation with the cheque.
- You must ensure that the cheque you are writing to somebody, should go to the same person’s Bank Account. You can do this by putting a double cross line on the top left corner and mentioning “A/C Payee”, and not by simply putting a double-cross line, without mentioning “A/C Payee”, as discussed in detail in the next section.
The correct way to cross the Cheque: Account Payee Cheque vs. simply Crossed Cheque
A simply crossed cheque, as shown above, can be encashed by the payee only by depositing it in his/her bank account. BUT, the problem with a crossed cheque is given below:
- a payee is free to make further endorsements.
- If the cheque is dishonored in the above example, then Mr. C can sue Mr. B and Mr. B can sue Mr. A. And, Mr. A can further sue the drawer of the cheque. So, it is very risky.
→ For example, if the cheque is written in the name of Mr. A. He can endorse it to Mr. B, by writing and signing at the back of the cheque leaf. And, Mr. B can further endorse it to Mr. C, by writing and signing at the back of the cheque leaf.
Therefore, merely by crossing the cheque, payment is not made to PAYEE ONLY! The payee can further endorse or cash it according to his wish.
Account payee cheques:
In the Cheque shown above, “A/C Payee” is written between 2 crossed lines. It ensures that the cheque will be encashed by depositing to payee account. This way, the cheque cannot be endorsed to anybody by a payee. And, it is the right way to cross the cheque.
The practice of writing “A/C Payee” cheques significantly protects the misuse of the cheque. And, it provides an added layer of security in the cheque transaction.
In case the cheque is not a crossing cheque, cancel Bearer.
An ideally written cheque is shown below:
2. Filling the monetary amount properly
There are 4 points to keep in mind while filling up the amount details in a cheque:
- After writing amount in words, always write the word ‘ONLY’.
- In case there are paisa to be paid along with rupees, put a ‘slash’ as a separation.
- Do not leave any space while writing the amounts in words as well as in numbers.
- After writing the amount in numbers, put a slash with a hyphen (/-), and do not forget to strike out the empty space, as shown in the image below:
3.The correct way to sign the Cheque
Signature plays a crucial role in Cheque transactions. Though nowadays Cheques come with our printed details such as name, address and so on.
Signatures are still counted useful to verify the identity of an issuer.
Keep your signature clear and place it properly in a blank space as above “Authorized Signatory” as shown:
4. Filling the Date in the right way
There are 3 points to consider while writing a date in your cheque:
- A cheque without a date will not be processed by the bank and it will get bounced.
- A wrongly written date such as a wrong month or year and especially if the date is past 3 months, may lead the cheque to get Dishonored.
- If you do not have sufficient balance in your account while your cheque is under the process of getting cleared, it will get bounced.
Keeping the above factors in mind, the date is supposed to be mentioned in your cheque.
5. No overwriting, scribbling or erasing/cutting anything to rewrite
If any kind of overwriting, scribbling or cutting happens in a cheque due to any reason. It is always a good practice to cancel the existing cheque and write a fresh cheque carefully.
General safety measures to be taken in your Cheque
- Important printed information such as MICR code & band, A/C number, IFSC code, and cheque number must be without any distortion.
- Never submit or drop a cheque without ensuring the correct details of Date, Payee name, Amount of Cheque in words and Numbers with precaution.
- It is a good practice to stick a transparent strip of cello tape on the name and amount written on the cheque, in order to keep them safe for any illegal changes.
- Keep the record of all the cheques used for payment purpose by noting down Cheque numbers or keeping a snapshot of a cheque before submitting it.
- In case, payments to be made towards bills for utilities, give the information such as Credit Card number, Mobile number, connection number at the reverse side of the cheque.
- Destroy all overwritten, folded or disfigured cheques.
Common questions on Cheques
1. How long does it takes for a cheque to get cleared?
In India, it normally takes 2-3 working days. But clearance time may exceed in few cases.
Nowadays we have Cheque Truncation System (CTS), it makes the cheque clearance process digital and faster.
2. How to Stop Payment on a Cheque?
You should write a letter to the bank clearly mentioning all necessary details regarding your cheque, so that your cheque can be spotted and clearing process may stop.
3. How to prevent the risk of cheque forgery?
Keep all the safety measures described in this post, such as writing the name and amount (in words and in digits) properly. Give smallest possible spaces while writing name and amount in words.
And, always write the word ‘only’ after mentioning the amount in words.
4. When can a bank dishonor or not process your cheque?
- If there is insufficient balance in your account, while your cheque is getting cleared!
- If the date mentioned in your cheque is more than 3 months old, it will be treated as an outdated cheque.
- If your signature doesn’t match.
- If your cheque is overwritten and information provided by you is unclear and cluttered.
- If the details in your cheque are not filled properly!
5. Can I write a cheque in 2 different handwritings or 2 different inks?
As long as information provided by you is clearly defined and your signature is accurate, there won’t be any problem related to different inks or handwritings.
6. While writing the amount in words, can I write ‘Nine Zero Zero Zero’ instead of Nine Thousand?
7. If I’m writing a cheque to any firm, is it mandatory to write M/S along with the name of the firm?
Hope you have found better clarity in writing the cheques effectively. After taking above safety measures your cheque will work well.
If you have more ideas based on your cheque writing experiences, write them in the comment section below.
Also, if you have any more questions related to cheques, their processing or their safeguard, put them in the comment below.