Types of Crossing of Cheques
1. General Crossing:
- In general crossing, two parallel lines are drawn across the cheque without any additional instructions.
- This type of crossing indicates that the cheque should be deposited directly into the payee’s bank account.
- It ensures that the funds are credited through the banking system, reducing the risk of theft or loss associated with cash transactions.
2. Special Crossing:
- Special crossing involves drawing two parallel lines with specific instructions written between them, such as naming a particular bank.
- This type of crossing further restricts the payment to be made only through the specified bank mentioned in the crossing.
- It adds an extra layer of security by limiting the encashment options and ensuring that the payment is processed through the designated bank.
- Special crossing can provide assurance to the payee that the cheque will be credited to a specific bank account, minimizing risks associated with transferring funds.
Go through Types of Crossing of Cheques for a detailed overview.
Crossing of Cheques (Negotiable Instruments Act)
Crossing of cheques is a fundamental practice in the area of banking and finance, essential for enhancing security and regulating the payment process. It involves drawing two parallel lines across the face of a cheque, which signifies that the payment should be made through a bank account and not in cash. This act serves as a protective measure against fraudulent encashment and unauthorized transactions. The Negotiable Instruments Act, 1881, governs the crossing of cheques in India, providing legal guidelines for their usage and implications. Understanding the types and concepts related to the crossing of cheques is crucial for ensuring the integrity and reliability of financial transactions within the banking system.
Key Takeaways:
- Banker and Customer Relationship: Crossing cheques is a vital aspect of the relationship between a banker and a customer, ensuring secure and regulated payment transactions.
- Types of Crossing: Cheques can be crossed in different ways, including general and special crossings, each providing varying levels of security and payment restrictions.
- Account Payee or Restrictive Crossing: Writing “Account Payee” between the crossing signifies that the payment should be credited only to the account of the specified payee, enhancing payment security.
- Not Negotiable Crossing: Adding “Not Negotiable” to the crossing restricts the transferability of the cheque, preventing further endorsement or transfer to another party.
Table of Content
- What is Crossing of Cheques?
- Banker and Customer: Crossing of Cheques
- Types of Crossing of Cheques
- Account Payee or Restrictive Crossing
- Not Negotiable Crossing
- Liability and Protections for Bankers
- Rights of Holder Against Banker
- Conclusion
- Crossing of Cheques- FAQs