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  • Category: Banking

    What is the significance of crossing a cheque?


    Wondering about the necessity to cross a cheque? Learn from experts what a crossed cheque implies and why it is necessary to cross a cheque.

    We have heard about crossing a cheque. While filling a cheque, we make two lines on the left hand top corner of the cheque and write 'A/C payee only'. What does this imply? What would happen if we don't cross it? When should we cross the cheque and when we should not cross a cheque?
  • #142139
    In simple words we can say that crossing is a kind of protection and safety of the cheque amount for the account holder as well as to the person to whom it is actually given or intended to be given.

    A cheque is called a 'Negotiable Instrument'. In simple sense it means that it can be taken and transferred freely by one person to another straightaway or by simple endorsement(signing on the back side). That is why we get cash for the cheque across the bank counters, even if we go ourselves, send our son or servant or any other person.

    However when a cheque is 'crossed' it means different. For bankers, 'Negotiable Instruments Act' is the base for their dealings with cheques Demand drafts etc.
    The NI Act under section 123 says about crossing. It is just two parallel transverse lines drawn on the face of the cheque. Practically, to avoid defacing what is written on the cheque the crossing is done on the blank corner of the cheque. As allowed by the Act, there was a practice to add '& Co" between the crossed lines. Now people just cross a cheque by drawing the two parallel lines

    Crossed cheque means it cannot be given cash across the counter. A crossed cheque can be given to a banker only. It can be transferred from the drawer's account to the payee's account if both are in same bank. If they are in different banks, then the payee's bank should 'collect' it from the drawer's bank via permitted procedures like interbank clearing, collection etc.
    A more specific crossing is 'Account payee crossing'. That is by writing words 'account payee within the crossing lines. It specifically means that the proceeds of the cheque should go only to the account of the payee whose name is written on the cheque.

    Crossing helps to trace who received the money. Account payee crossing helps us in maters where disputes take place after money is paid and also acts as proof in court cases of making payment . It also helps to avoid suppression of financial transactions by avoiding cash over counter method.

    If a cheque is not crossed, and the cheque is lost(but not informed to the bank and stopped), then anyone who gets the cheque can encash it. But when a crossed cheque is presented to a bank, direct cash is not given and the amount is credited to the person's account, after identifying him by the name on the cheque or by the endorsement.

    If our intention is to create a record of payment and avoid direct cash payment, but want the money to be credited to the account of the person or firm in whose name cheque is given, then we have to cut the words 'bearer' in the cheque and cross the cheque with words 'account payee.

    Crossing is also very significant to the bankers and their interbank dealings, as it decides the relative position and responsibility and liability of the concerned bankers.

  • #142140
    While filling a cheque two lines are made on the left hand top corner of the cheque. This is known as crossing of cheque. Crossing of the cheque means you are advising the bank to put the realization amount from the cheque in the account of the beneficiary but cash can't be given. If the beneficiary wants to draw the money he has draw it by giving his cheque. If the cheque is drawn on SBI and the beneficiary is not having an account there he can't present the cheque there. He has to submit the cheque in the bank where he is having an account. In turn they will collect from SBI and put it to his account. It may take 2 to 3 days to complete this transaction. By giving a crossed cheque you can ensure that amount has gone to correct account and you will have a proof. If any thing wromg in posting, bank is responsible.

    If you want cash directly from bank you can 't cross the cheque. You have to give a self cheque. You have to collect the cash from bank by signing on the back also. You can send the cheque by anybody by signing on the front and back of the cheque. The bank will give money to the person who brought the cheque by getting his signature on the back of cheque. Bank can't be responsible for that action, if something fraud occurs in this transaction. If you have lost a self cheque after signing on the back and front, any body can en cash it. But crossed cheque will not allow this.

    drrao
    always confident

  • #142141
    Crossing a cheque means that it can not be exchanged with cash (value as written there) in the bank. It has to be deposited in the bank account of the person in whose name it is issued.

    On the contrary an uncrossed self cheque can be exchanged for cash by the bearer in the bank.

    If you read the first line in a cheque leaf, it reads -
    Pay to......................... or bearer an amount of................................ only.

    Now 'or bearer' is a problem here. This gives an option to the bank to pay cash to whoever is the bearer and presenting the cheque to bank.

    Once the cheque is crossed there is no cash payment and hence 'or bearer' is taken care.

    Basically crossing of cheque is for safe and secure transfer of money from bank account of one person to that of another person (payee) in whose name cheque is issued.

    Knowledge is power.

  • #142142
    Crossing a cheque on the uppermost left portion by two lines parallel means that cheque is crossed cheque and the benificiary cannot withdraw money in cash but the same has to be deposited in the Bank where one is maintaining his account by filling up a deposit form indicating the value of the amount, name of the bank and place from where it has been issued. Keeping the counter foil of the deposit form as a proof, the form along with the original cheque has to be submitted to the Banking authority so that the amount may be credited in the account of the owner. The transaction may take two to three days in final clearance.
    By putting two lines parallel on the left side makes it a safe and in no way, cash can't be withdrawn thus making a fool - proof arrangement of making payment to the benificiaries.
    Significance of account payee only means the payment must reach to the account of the holder. Not crossing the same, the money can be encashed by any one on behalf of benificiaries and the cash may reach to the unscrupulous fellow.

  • #142145
    This is a good query, actually now most of the bank transaction are done online but suppose if you cross the check it is paid only to that person which is mentioned in the check. No other person can withdraw that amount other than the person's name in the check in simple crossed check is paid only the payee name mentioned in the cheque. Whereas if you don't cross any body can withdraw the amount from the check that you have mentioned. Account payee cheque is given only to payee name.

  • #142151
    Try to understand with the example if you give me cheque written self than I will withdraw cash from it, now can you prove me wrong that I have withdrawn money if I say that that was not me and any other person who theft from me. Somebody cannot get money actually in hand.

    In the condition of crossed a cheque, cash cannot be paid over the counter for a crossed cheque by the banker. Cheque cannot be en cashed by a person carrying it. the proceeds could only be credited to an account in the name of the benificiary and no cash is allowed.

  • #144121
    There are lots of Crossing in Cheque when anybody give cheque to anybody then the giver crossed it as a parallel two lines or write at bottom "A/C PAYEE" its means and significance that:

    1. first the cheque issued in the favour of person only that particular person's bank account can credited only. In other words no person can get credited the payment from the same.

    2. Sometimes we see that in the bottom of cheque written bank's name in the cheque it means the cheque which has been issued only be encased in the bank account which would have been mentioned in the cheque and in that case written as like "SBI ONLY" or "PNB ONLY"

    Any other method are also available as like "NOT NEGOTIABLE" etc.

  • #147153
    Hi Friend
    Cheque is a negotiable instrument.And crossing of cheque means drawing two parallel lines on the face of the cheque and the meaning of it is : it should be credited to the account of the person or entity whosename is written on the cheque and can not be encashed by the person over the counter.The benefit of crossing is : If the cheque is crossed and if name of person or entity to whom cheque is given is written at pay, then if cheque is lost by that person and of someone finds that cheque also he can not encash that cheque as crossing is done and name also written on the cheque.If crossing on cheque is not done, then anyone can encsah the cheque over the counter.


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