Types of Cheques in Banking: Quick Answer
A cheque is a bill of exchange drawn on a specified banker and payable on demand (Section 6, Negotiable Instruments Act, 1881). The main types of cheques in Indian banking are bearer, order, crossed (general and special), account payee, open, self, post-dated, ante-dated, stale, mutilated, banker's cheque and traveller's cheque. A cheque is valid for 3 months from its date, and all cheques in India are cleared through the image-based Cheque Truncation System (CTS).
Key takeaway: For bank exams remember three things: the three parties (drawer, drawee, payee), the difference between bearer, order and crossed cheques, and the rules on validity (3 months), Positive Pay (₹50,000 and above) and Section 138 (dishonour).
Parties to a Cheque
| Party | Who | Example |
|---|---|---|
| Drawer | Account holder who writes and signs the cheque | Ravi, who issues the cheque |
| Drawee | Bank on which the cheque is drawn | Ravi's bank, which pays |
| Payee | Person named to receive the money | Sita |
| Endorser / endorsee | Payee who transfers an order cheque by signing on the back, and the person it is transferred to | Sita endorses to Mohan |
Types of Cheques in India with Uses
| Type | What it means | Can be encashed at counter? |
|---|---|---|
| Bearer cheque | Payable to whoever presents it ("or bearer" not cancelled) | Yes; risky if lost |
| Order cheque | "Bearer" struck off and "or order" left; paid to the named payee or endorsee after identity check | Yes, to the right person |
| Open cheque | An uncrossed cheque (bearer or order) | Yes |
| Crossed cheque | Two parallel lines on the top-left corner; money goes only into a bank account | No |
| Account payee cheque | Crossed with "A/c Payee"; credited only to the payee's account | No; cannot be endorsed in practice |
| Self cheque | Drawer writes "Self" to withdraw cash from own account | Yes, by the drawer |
| Post-dated cheque | Carries a future date; can be paid only on or after that date | Only on/after the date |
| Ante-dated cheque | Carries a past date; valid if within 3 months of that date | Yes, within validity |
| Stale cheque | Presented after 3 months from its date; the bank will not pay it | No |
| Mutilated cheque | Torn or damaged; bank may refuse or ask for drawer's confirmation | Bank's discretion |
| Banker's cheque | Issued by a bank on itself, payable at the same city | Treated as nearly as good as cash |
| Traveller's cheque | Pre-paid, fixed-value cheque for travel, signed twice by the holder | Largely obsolete now |
| Gift cheque | Issued by banks for gifting a fixed amount | Credited to account |
Note: a demand draft looks like a cheque but is not a cheque; it is issued by one branch on another and cannot be stopped by the buyer after issue.
Crossing of Cheques: General, Special and Not Negotiable
Crossing is covered in Sections 123 to 131 of the Negotiable Instruments Act, 1881.
| Crossing | How it looks | Effect |
|---|---|---|
| General crossing (Sec 123) | Two parallel lines, with or without "& Co." | Paid only through a bank account, any bank |
| Special crossing (Sec 124) | A bank's name written across the cheque | Paid only through the named bank |
| Not negotiable crossing (Sec 130) | Crossing with words "Not negotiable" | Can be transferred, but the transferee gets no better title than the transferor |
| Account payee crossing | Crossing with "A/c Payee only" | Banking practice (not defined in the Act): money goes only to the payee's account |
Who can cross a cheque? The drawer, the holder, and the bank (Section 125).
Cheque Rules for Bank Exams 2026
- Validity: 3 months from the date of the cheque (RBI directive effective 1 April 2012; earlier it was 6 months).
- CTS-2010: standard cheque format with security features; only CTS-2010 cheques are cleared. The physical cheque stays with the presenting bank; only its image and data move.
- Continuous clearing: RBI moved CTS from batch processing to continuous clearing with settlement on realisation. Phase 1 started on 4 October 2025 (drawee bank must confirm by 7 pm the same day). Phase 2, planned for 3 January 2026, was postponed by RBI on 24 December 2025 until further notice (RBI circular RBI/2025-26/156).
- Positive Pay System: for cheques of ₹50,000 and above, the account holder can share key details (date, payee, amount) with the bank in advance; banks may make it mandatory for ₹5 lakh and above.
- MICR code: 9-digit code at the bottom of a cheque (city, bank, branch).
- Section 138: dishonour of a cheque for insufficient funds is a criminal offence, punishable with imprisonment up to 2 years, or fine up to twice the cheque amount, or both. The payee must send a notice within 30 days of being told of the dishonour, and the drawer gets 15 days to pay.
Sources: Negotiable Instruments Act, 1881 (indiacode.nic.in); RBI circulars on continuous clearing (13 Aug 2025 and 24 Dec 2025) on rbi.org.in.
Types of Cheques MCQs with Answers
- A cheque presented after three months from its date is called? Answer: Stale cheque.
- Who is the drawee of a cheque? Answer: The bank on which it is drawn.
- A cheque with two parallel lines and a bank's name between them has? Answer: Special crossing (Section 124).
- Which section of the NI Act deals with dishonour of cheque? Answer: Section 138.
- A cheque dated 15 November handed over on 1 November is a? Answer: Post-dated cheque.
- Positive Pay applies to cheques of what value? Answer: ₹50,000 and above.
- Which cheque can be encashed by anyone holding it? Answer: Bearer cheque.
- Under CTS, what moves between banks? Answer: The image and data of the cheque, not the paper.
- Phase 1 of CTS continuous clearing started on? Answer: 4 October 2025.
- "Not negotiable" crossing is in which section? Answer: Section 130.
Common Traps on Cheques in Bank Exams
- A demand draft is not a cheque, and a banker's cheque is not a demand draft.
- "Account payee" crossing is a banking practice; it is not one of the crossings named in the Act.
- A "not negotiable" cheque can still be transferred; only the title protection changes.
- Validity is 3 months now, not 6 months.
Types of Cheques FAQs
What are the types of cheques in banking?
Bearer, order, open, crossed (general and special), account payee, self, post-dated, ante-dated, stale, mutilated, banker's, traveller's and gift cheques.
What is the validity of a cheque in India?
Three months from the date written on it.
What is the difference between a bearer and an order cheque?
A bearer cheque is paid to whoever presents it; an order cheque is paid only to the named payee or the person to whom the payee endorses it.
Can a crossed cheque be encashed at the counter?
No. A crossed cheque is paid only into a bank account.
What is CTS in cheque clearing?
The Cheque Truncation System, in which the cheque's electronic image is sent for clearing instead of the paper cheque.
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