Tuesday, 10 November 2015

IBPS Banking Awareness Guide - What is Crossing of Cheque? A full story. Yes, A Crossed Cheque is Safer Than A Bearer Cheque

Dear aspirants, When a cheque is crossed, the holder thereof cannot encash it at the counter of the bank. Encashment at the counter of the bank is possible only in the case of an open cheque, i.e. a bearer cheque or an uncrossed cheque.

The holder of a crossed cheque has to present the same to his bank for collecting its amount from the drawee bank. When the amount of the cheque is collected, the account of the holder is credited. Thus, it is possible to trace the party receiving the amount of the cheque. This is not so in the case of a bearer cheque because a bearer cheque can be encashed by anybody who presents it at the counter of the bank. Crossing, therefore, gives protection against payment of a cheque to wrong parties.
A holder of a crossed cheque should either have a bank account in his own name or should get the cheque encashed through a relative or friend having an account in some bank, by endorsing it in his favour. In either case the payee can be traced.

Thus, yes. a crossed cheque is always safer than a bearer cheque.

What is Crossing of Cheque ?

A cheque is a negotiable instrument. During the process of circulation, a cheque may be lost, stolen or the signature of payee may be done by some other person for endorsing it. Under these circumstances the cheque may go into wrong hands.
Crossing is a popular device for protecting the drawer and payee of a cheque. Both bearer and order cheques can be crossed. Crossing prevents fraud and wrong payments. Crossing of a cheque means "Drawing Two Parallel Lines" across the face of the cheque. Thus, crossing is necessary in order to have safety. Crossed cheques must de presented through the bank only because they are not paid at the counter.

Different Types of Cheque Crossing :

1. General Cheque Crossing :

Generally, cheques are crossed when
  1. There are two transverse parallel lines, marked across its face or
  2. The cheque bears an abbreviation "& Co. "between the two parallel lines or
  3. The cheque bears the words "Not Negotiable" between the two parallel lines or
  4. The cheque bears the words "A/c. Payee" between the two parallel lines.
A crossed cheque can be made bearer cheque by cancelling the crossing and writing that the crossing is cancelled and affixing the full signature of drawer.

Specimen of General Cheque Crossing

 2. Special or Restrictive Cheque Crossing :

When a particular bank's name is written in between the two parallel lines the cheque is said to be specially crossed.

Specimen of Special or Restrictive Cheque Crossing

In addition to the word bank, the words "A/c. Payee Only", "Not Negotiable" may also be written. The payment of such cheques is not made unless the bank named in crossing is presenting the cheque. The effect of special crossing is that the bank makes payment only to the banker whose name is written in the crossing. Specially crossed cheques are more safe than a generally crossed cheques.
Hope that, this article is more useful for IBPS Bank Exam Aspirants.

Thanks for reading this article. My self  Mukul kakani, Asst. Marketing Officer.

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