Tuesday , 21 October 2014
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Bearer cheque and Order cheque

When you apply for a new cheque book, either by visiting the branch or online, you’ll be asked what type of cheque book you need. There are basically two kinds of it, a Bearer Cheque and an Order Cheque. If you don’t specify, or have no idea about these, generally, it’s the Order cheque books that banks’ provide.

Order cheques are more secure than Bearer cheques.

Bearer cheques will not have any name written on it, but just the amount authorized to withdraw. Any one in possession of the same can produce it to the bank and withdraw the mentioned amount.

While on the other hand, Order cheques will require you to mention a person or a company’s name to whom you authorize the withdrawal of the amount mentioned. On producing this type of cheques, banks generally ask for ID proof of the producer, so that the money only go to right hands. You can make Order cheques more secure by crossing them. Two cross lines are normally drawn at the top left of cheque which indicates that the cheque is A/C payee only. In other words, the amount mentioned on the cheque should be deposited to the A/C of person (whose name is mentioned on the cheque) and no physical cash be given.

Endorsing a cheque

Endorsement is nothing but transferring the cheque to another person. To transfer the cheque to another person, the payee has to simply write (at the back side where generally space will be provided for endorsements) ‘Pay to so and so’ and sign it. The cheque will remain a crossed order cheque (if it is) but will be a/c payable to the newly endorsed account holder. If it is not crossed, the newly endorsed person can withdraw the money mentioned on the cheque.

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