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Money Nov 8, 2012

New cheque norms: Know how to write the cheques correctly

By Bindisha Sarang

Like it or not, many don't write cheques properly. It is not just filling in the details, but how you actually fill the details on the cheque that matters.

Why so? Two reasons. First, very soon the banking system will fully adopt the Cheque Truncation System (CTS) 2010 standards. This means your cheque will not travel physically from one location to another, but an electronic image will be transferred for the bank where the cheque is deposited to the drawee bank.

Reuters

This also means even a small mistake on your cheque will result in your cheque not getting cleared. And, most banks have started to charge for extra cheques you order.

In addition, writing the cheque properly also prevents the risk of frauds on your cheques. Not to mention that banks charge a few hundred rupees as a fine, for cheques that get bounced due to non-financial reasons.

So, here are a few things to keep in mind while writing a cheque and you might just save a few hundred bucks.

Rule 1: Always move from left to right: While it's not necessary to move from left to right direction, it just helps your cheque writing task, some method. And this helps you cover all details on the cheque in a structured manner. If you randomly fill in the cheque details, you might just miss filling something. And, that could lead to bouncing of cheque due to non-financial reasons.

Step 1: Date: Without a date your cheque will justnot be cleared, period. You will be surprised to know, how many actually forget to write the date, at times the correct date. If you want the cheque to be cleared right away, write the current date. If you plan to give a post-dated cheque ensure you give the right date. If by mistake you put in a prior date and there aren't sufficient funds in your account, your cheque might bounce.

Step 2: Gaps: It's good to give people space. But when it comes to your cheque, leaving space on them increases the risk of frauds and cheque tampering.After the printed word "Payee" on the cheque, write the name of the person/entity to whom you want to give the cheque. So, it's ...

Payee Jayaram Kumar and not Payee Jayaram Kumar

Step 3: Bearer beware: If you are addressing a cheque to a person in particular, write the name accordingly. Keep in mind that unless you are addressing the cheque to a particular person, cancel the printed word "bearer" from the cheque. Usually you will see the word "bearer" on the right hand side of the cheque, somewhere under the date. Having the word bearer means, anyone who presents (bears) the cheque, the amount will be payable to him. If you don't cancel the word bearer and your cheque gets lost, it's an invitation to risk of fraud.

Step 4: Cross: If you want the cheque to be encashed over the counter in any branch of your bank, do not cross the cheque. Crossing of cheque simply means, when you draw two parallel lines on the left corner of the cheque and write the words "Account Payee" between those lines. Some even write it as "A/C payee". Keep in mind that when you cross a cheque, the funds reach the account of the person, and cannot be encashed at a branch counter.

Step 5:Box: In the box where you have to write the amount in numbers, ensure you write in the correct manner. Don't write Rs999, instead write Rs999/-. The sign /- ensures that no one adds another digit to the amount.

Step 6: Figures: Also when it comes to writing the amount, do not leave space. For instance, if you want the amount to be Rs5,000 don't leave space before the number 5000 or anyone can simply add the number 3 before the number 5000 and make it 35000. Same applies when you write the amount in words. Five thousand can be easily made into thirty five thousand, if you leave space before the word five.

Step 7: Signature: Only, and only, after filling all the above mentioned details, should you actually sign the cheque. Also remember that going forward; you will need to use darker ink to sign the cheque. Sign the cheque above your name, which is printed on the cheque. And never, never sign blank cheques in the cheque book. If you lose the cheque book, you know what will happen next.

These are a few things to keep in mind while write a cheque. Keep tracking this space for more info on cheques. Next we will cover the different types on crossing of cheques and when to use which type of crossing.

by Bindisha Sarang

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