Account Payee Cheque
Account payee cheques are a popular form of payment in India since they are safe and practical. Crossed cheques, bearer cheques, and account payee cheques are just a few of the several sorts of cheques that individuals commonly get wrong. You may now add an extra layer of security when sending and receiving payments with account payee cheques because after reading this article you will know what one is, how to draught one, and how to cash one.
What is An Account Payee Cheque?
Due to the fact that the money can only be put into the payee’s account, an Account Payee Cheque is one of the most secure types of checks. This check cannot be endorsed by the payee to anybody else. Understanding the distinctions between a drawer, drawee, and payee will help one comprehend the notion better.
- A drawer is the party who writes and signs the check; often, this is the account holder or authorised signer for the account from which the funds will be taken.
- The person to whom the drawer writes the check is known as the drawee.
- The drawer often directs the drawee, who is the bank, to draw the specified amount.
- The party to whom the final payment is made is known as the “payee,” and their name is written on the check.
How should an Account Payee Cheque be written?
You must cross two lines on the left corner of the cheque and write “Account Payee” in between them to write an account payee cheque
Keep in mind that if you merely cross a cheque without writing “Account Payee” on it, it will not be an account payee cheque
A crossed cheque differs from an account payee check in terms of its properties. Consequently, it is important to distinguish between the two.
How is the account payee cheque different from other cheques?
The definition of an account payee cheque has already been stated. Below are definitions for more types of cheques-
- Crossed cheque
A crossed cheque is one whose proceeds can only be deposited into the payee’s account. Such a payee may, however, endorse the cheque k to a third party, who may then endorse it to a different party. The name of the endorsee is visible on the cheque, and their signature is visible on the reverse of the cheque leaf.
- Bearer cheque
Bearer cheques are all cheques that must be presented to the bearer unless the term bearer is crossed or another crossing mark is created. The individual holding such cheque over the counter may cash them. Particularly unsafe and vulnerable to abuse in the event of loss, this type of check. These cheque can also be immediately delivered to a third party and do not require any endorsement.
- Order Cheque
A cheque that has the words “to Order” printed on it and the words “Bearer” crossed off is known as an order cheque. Although bearer cheques can be endorsed by simply giving them to another person, this type of cheque cannot. To be accepted, it must be duly signed and endorsed.
What is the Significance of Account Payee Cheque?
Here is the Significance of Account Payee Cheque-
- The least likelihood of misuse exists because the sum will only be paid by putting it into the payee’s account.
- The fact that the payee cannot endorse the cheque to another party only strengthens the security of these cheques
- The fact that account payee cheques have a three-month validity period is another crucial thing to keep in mind.
How to Deposit or Encash A/C Payee Cheque
Remember that you cannot cash an Account payee cheque at the counter whenever you receive one. You must use the check deposit form to deposit it into your savings account. Fill out the check deposit form completely to get started. Attach that with the check and give it to the customer service representative or put it in the deposit box for checks. The bank will deposit the funds into your account in a few days. This is the procedure for cashing an account payee cheque
Please remember that the contact information and savings account information must be written on the back side of the cheque. Even if the deposit form is incorrect, the bank will still deposit the money into the correct account.
Clearing Of Account Payee Cheque
As a result, an account payee chec cheque differs fundamentally in terms of endorsement from a bearer check as well as from crossed and order cheque . Additionally, a bearer cheque is the most vulnerable to fraud, but an account payee check is a very safe instrument.
When you present a check made payable to an account at your institution and when the reimbursement procedure is finished. These two must go through a process, which we might refer to as the check clearing method. This procedure goes like this:
- The payee first goes to the bank and deposits his check there.
- Once the check is turned in, the bank will finish the transaction and alert the drawer’s bank to initiate the payment. They even scan the check before sending it to the bank of the drawer.
- The drawer bank will examine the sign after receiving the request, begin the process, and finish the payment after getting confirmation. Only if there is money in the drawer’s account will the receiver receive the specified sum.
- The sum will be deposited into his account by the payee bank following the payment.
Account Payee Cheque- FAQs
- Can you cash an account payee cheque?
Answer-Therefore, the Bearer Cheque can be cashed over the counter by anyone. However, as stated earlier, an Account Payee Cheque cannot be cashed at a counter. It needs to be deposited in your bank. And the money will be credited to your account.
- What distinguishes an account payee cheque from a bearer cheque?
Answer-By writing “Account Payee” or crossing it twice with two parallel lines in the top left-hand corner, a bearer check can be converted to an account payee cheque
- Who has access to an account payee cheque?
Answer-Due to the fact that the money can only be put into the payee’s account, an Account Payee Cheque is one of the most secure types of checks. This check cannot be endorsed by the payee to anybody else. Understanding the distinctions between a drawer, drawee, and payee will help one comprehend the notion better.
- The payee on a bank transfer is who?
Answer-A payee is a person or business that gets money in exchange for goods or services, for example. Cash, cheques, money orders, electronic fund transfers, and other forms of payment are all acceptable forms of payment.
- How long does it take for an AC payee cheque to clear?
Answer-For all intents and purposes, the clearing of cheques between regularly scheduled commercial banks now takes place within three working days, according to an Indian Bank official who requested anonymity because he was not authorised to speak to the media. The presenting bank is where the CTS captures the image of the cheque