2. Why is a Cheque used?
• For commercial transactions, it is not always
possible to carry huge amount of cash.
• So they adopted an easiest way to carry huge
amount of money, in a piece of paper
(document), called cheque.
• It is less risky and the danger of loss is minimized.

3. What is a Cheque?
• A cheque is an agreement between two individuals
or organizations to make a payment.
• The banks have no involvement.
• The extra instruction as limiting its negotiable.
Essential Characteristics:
• It is always drawn on a specified banker.
• It is payable on demand.
• It is an instrument in writing.

4. Essential Characteristics
• Cheque has 3 parties involved:
– Drawer
– Drawee
– Payee
• A cheque should be duly dated and signed by the
drawer.
• ‟s name and amount payable to him should be
clearly written.
• It is always drawn on a specified banker.
• It is payable on demand.
• It is an instrument in writing.

5. Why Cheque is crossed?
• Crossing of cheque means drawing two parallel lines
on the face of the cheque with or without additional
words like "& CO." or "Account Payee" or "Not
Negotiable".
• A crossed cheque cannot be en cashed at the cash
counter of a bank but it can only be credited to the
payee's account.
• Encashment at the counter of the bank is possible
only in the case of an open cheque, i.e. a bearer
cheque or an uncrossed cheque.

6. Contd…
• The holder of a crossed cheque has to present the
same to his bank for collecting its amount from the
drawee bank.
• When the amount of the cheque is collected, the
account of the holder is credited.
• Crossing, therefore, gives protection against
payment of a cheque to wrong parties.

7. Cheque Clearance…

8. Types of Cheque:
•
•
•
•
Open cheque
Crossed cheque
Bearer cheque
Order cheque

9. Types of crossing:
1]General Crossing:
A cheque is said to be crossed generally
when it bears across its face any of the following:
• Two transverse parallel lines.
• “And Company” or “And Co”.
• “& Company”.
• “Not Negotiable”.
• “Account Payee Only”.

10. General Crossing

11. Types of crossing:
2] Special Crossing:
• It is a cheque in which the name of the bank is
written between the two parallel lines and hence it
can be paid to that specific banker only.
• Special Crossing can never be converted to General
Crossing.
• In Special Crossing paying banker to honor the
cheque only when it is presented through the bank
mentioned in the crossing and no other bank. Such
a cheque is crossed specially to that banker.
• Special crossing, no such lines are necessary.

12. Special Crossing

13. Types of crossing:
3] Restrictive Crossing:
• Restrictive Crossing is also called as Special Crossing.
• This crossing can be made in both general and special
crossing by adding the words “Account Payee”.
• The effect of special crossing is that the bank makes
payment only to the banker whose name is written in
the crossing.
• In this type of crossing the collecting banker is
supposed to credit the amount of the cheque to the
account of the payee only.

14. Restrictive Crossing

15. Types of crossing:
4] Not Negotiable Crossing:
• „NOT NEGOTIABLE‟ does not mean not transferable.
• It can be transferred like anyother cheque.
• The word ‟NOT NEGOITABLE‟ can be added to general
as well as special crossing
• The transferee of such a crossed cheque cannot get a
better title than that of a transferor (cannot become a
holder in a due course)
• The object of this type of crossing is to give protection to
the owner of the cheque by preserving his rights against
any subsequent holder.

16. Not Negotiable Crossing