In India, a bounced cheque can result in two years' imprisonment and a fine twice the amount Under Section 138 of Negotiable Instruments Act, 1881.
Guidelines to write a cheque.
Follow these steps to ensure you’re writing a cheque correctly:
Date: Write the current date on the top right or left corner of the check.
Payee: On the “Pay to the Order of” line, type the name of the individual or business you wish to pay. Use the recipient’s precise and complete name whenever possible.
Amount in numbers: In the box next to or below the payee line, write the payment amount using numbers. For example, if you’re paying 100, write “100.00.”
Amount in words: On the line below the payee line, write the same amount you wrote in step 3, but this time in words. Begin writing as close to the left-hand side of the line as possible, using uppercase letters. For example, if you’re paying 100, write “One hundred dollars and 00/100.”
Signature: Sign your name in the bottom right corner of the check. Ensure that your signature matches the one you have on file with your bank.
Account number: On the bottom of the check, you may find a space where you can write your account number. This step is also optional, and you can leave it blank if desired.
Remember to double-check the accuracy of all the information before you present the check as a payment method.
Various Cheque Types:
Account Payee Cheque
Self Cheque
Cancelled Cheque
Post Dated Cheque
How to: Write an Account Payee Cheque
An account payee cheque is issued by an account holder and can only be deposited into the payee’s bank account, not encashed over the counter. It is marked as “account payee only” or “A/C Payee Only” or includes the phrase “not negotiable” between two parallel lines on the top left-hand corner of the cheque.
How to: Write a Self cheque
A self-cheque is a check that you write to yourself, allowing you to withdraw money from your own bank account. It’s like giving yourself a payment or transferring funds to yourself.
How to: Write a Cancelled cheque
A cancelled cheque is a voided check that cannot be used for transactions. It’s often requested by banks or organizations to verify account details or set up electronic transactions.
How to: Write a Post dated cheque
A post-dated cheque is a check with a future date. It’s used to delay cashing or depositing the cheque until that specified date.
How to: Prevent Check or Cheque Bounce
Monitor your account balance regularly to ensure you have enough funds to cover the check amount.
Keep track of your transactions, including issued checks, to avoid spending money that is already allocated for payments.
Create and stick to a realistic budget that considers your expenses and financial obligations.
Utilize online banking services to easily track your account balance and set up low-balance alerts.
Communicate promptly with the payee if you anticipate any issues with your account balance.
Consider signing up for overdraft protection, but be aware of the associated fees and terms.
Familiarize yourself with your bank’s policies on check clearing times, deposit holds, and fees.
By following these simple guidelines, you can minimize the risk of check bouncing and maintain better control over your finances.
