Parties of a Cheque

There are three parties to the cheque 

•  Drawer or Maker 
• The bank - on whom the cheque is drawn (i.e. the bank with whom the account is maintained by the drawer)  
• Payee – Payee is the person whose name is mentioned on thecheque to whom or to whose order the money is directed to bepaid.

BANKING OMBUDSMAN SCHEME 2006

1) The Banking Ombudsman Scheme enables a bank customer for filing of complaints relating to certain services rendered by banks.

2) The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services.

3) All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

4) The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.

5) The maximum compensation which a BO can help a complainant to get is Rs. 10 lakhs.

6) If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.

7) If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority who is the Deputy Governor of the RBI.

NEGOTIABLE INSTRUMENTS & Cheques

According to section 13 of the Negotiable Instruments Act, 1881,

a negotiable instrument means “promissory note, bill of exchange, or cheque, payable either to order or to bearer”.

Cheque

It is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited

money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument."

Types of Cheque

1. Bearer Cheque or open Cheque

When the words "or bearer" appearing on the face of the cheque are not cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. 

2. Order Cheque

When the word "bearer" appearing on the face of a cheque is cancelled and when in its place the word "or order" is written on

the face of the cheque, the cheque is called an order cheque. Sucha cheque is payable to the person specified therein as the payee, or to any one else to whom it is endorsed (transferred).

3. Crossed Cheque

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 encashed at the cash counter of a bank but it can only be credited to the payee's account.

4. Ante-Dated Cheque

If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as "ante-dated cheque". Such a

cheque is valid upto 3 months from the date of the cheque. 

5. Post-Dated Cheque

If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date on the cheque.

6. Stale Cheque

If a cheque is presented for payment after 3 months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank.

7. A self cheque

A self cheque is written by the account holder as pay self to receive the money in the physical form from the branch where he holds his account.

8. “A truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, i mmediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing. The expression “clearing house” means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India.