Why crossing a cheque

The open cheque or the bearer cheque is used for over the counter instant cash transactions whereas a crossed cheque can not be used over the counter transactions instead it is used to make sure that the amount specified on the cheque cannot be en-cashed and should be deposited directly to the bank account of the payee by the banker.

The Crossing of a cheque is the instruction to the paying banker to transfer the specified amount to the payee account from the payer account and not over the counter. The crossing of the cheque is used as a means of protection against misusing cheques.

In general, the crossing of a cheque is by drawing two parallel lines at the front portion of a cheque. This double-line code on the cheque indicates that it can deposit into a bank account strictly. Once a cheque crosses, it is impossible to uncross it. Crossed cheques are non-transferable to a third party and limited to payer and payee only. Definition : Crossing of a cheque is nothing but instructing the banker to pay the specified sum through the banker only, i. Hence, it is not instantly encashed by the holder presenting the cheque at the bank counter.

If any cheque contains such an instruction, it is called a crossed cheque. A cheque which has no crossing at all is called an open cheque. Customers who specifically request a chequebook with open cheques may have their own good reasons for doing so, but their bank will explain the possible risks. It cannot be cashed over the counter by the payee; it must be paid into an account in the same name as that appearing in the payee line of the cheque. Not where the cheque is crossed.

Any alteration or attempt at alteration of the crossing would be treated with caution by a bank as it could be a fraudulent. Section 77 2 of the Bills of Exchange Act specifically allows both the receiver i. Forgot your password? Get help. Table of Contents. Financial structuring of real estate projects.

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