Answer:
What is a Cheque?
A cheque is a negotiable instrument that can be issued by one person to pay money to another person/entity. The person to whom the cheque is issued is entitled to receive the sum mentioned in the cheque (provided the account has sufficient balance) from the bank where the cheque issuer holds his account.
What are the important things to note while writing a cheque?
There are a number of important things that we must keep in mind while writing a cheque. They are elaborated below.
1. Remember to Cross the Cheque
Crossing a cheque means putting two parallel lines on the left hand top corner of the cheque. This means that, the cheque is a Account Payee cheque which means it can only be deposited into another account and cannot be exchanged for cash over the counter. This serves two purposes - you can keep a track of who encashed your cheque and also ensure that even if the cheque is lost, it cannot be misused by anyone. The person to whom the cheque was paid will be recorded.
2. Write the Name of the person to whom the cheque is to be paid in full
It is very important to state the cheque payee's name in full without missing any part of the name in the "pay to line" The name entered here should match the name under which the person holds a valid bank account. If there is any mismatch or spelling mistake the cheque will not be paid
3. Write the amount to be paid both in numbers and words
It is advisable to write both the number value as well as value in words in the cheque. Also care must be taken to ensure that there are no leading or trailing blank spaces while entering these values which might cause tampering of the cheque and modification of the cheque value
4. Write the cheque date promptly
Do not issue cheques that do not have a cheque issue date.
5. Sign the cheque at the bottom right hand corner with the exact signature that is registered with the bank records.
If there is even a slight mismatch between the signature in the bank records and that in the cheque the bank will not release the payment.