We often use cheques in day to day personal finance. Due to digital money making our transactions go cashless, cheques have become a little less in vogue.
Nevertheless, their usage can not underestimated. We still receive a lot of cheques every day. Cheques were the first forms of cash transactions.
However, I continue to see the same mistakes on cheques repeatedly. So, I thought a post on mistakes to avoid while writing a cheque may help you
Not ensuring the availability of funds
A cheque may be dishonored for not having sufficient available balance in the account. Insufficient funds and they have written out a cheque. This is one of the basic reasons for cheques for cheques to bounce.
So, please ensure that you have sufficient balance in your bank account before you write out a cheque. Factor in the impending auto-debits, EMIs etc so that you don’t run of money in your account when the cheque is presented for payment.
Apart from being the no 1 reason for dishonor of cheques, writing a cheque without available balance in the account may in fact land you in trouble. This is treated as a gross misconduct. And the maker of cheque may be taken to task and even land in jail for writing a cheque with insufficient balance.
Not writing full name on the cheque
My name is Robert Louis Stevenson, let us say! But while writing a cheque, I received a cheque that had my name written as R L Stevenson. This cheque will not be paid. It will be returned to the depositor with a return memo that may say, “Referred to drawer”.
When you write a cheque using the short name or abbreviations, there may be ambiguity in the name. Thus, the bank is not in a position to establish the fact if it was written to Robert Louis Stevenson or Rolland Lambert Stevenson.
The best way to ensure the accuracy of the payee’s name would be to ask for the exact name as it appears on the bank account. For example, the bank may also return the cheque referring to the drawer if the name on the cheque is Robert Stevenson but the name on the account is Robert Louis Stevenson.
So, the name on the cheque and the name on the bank account should match to avoid the return of cheque.
Overwriting on cheque
This is also one of the main reasons for a cheque being returned or dishonored. A lot many times, we have made a mistake in writing the correct spelling or the amount of the cheque.
So, we may try to change by modifying few letters here and there. The bank does not clear such cheque. They are likely to be returned as referred to the drawer.
If you have made a mistake on the cheque. You have 2 options. First is to write out a fresh cheque. The second is to just cut what you have written with one line across it and re-write the correct information next to it.
And after you have made this change, put a small signature of yours. This would signify that the change was done by you.
As per the latest norms of RBI on writing of a cheque, the cuttings and overwriting are not allowed under any circumstances.
Not filling all the columns in the cheque
While writing a cheque, please make sure that you have completed all the fields in the cheque. That you have written the date, the amount in words and figures, name of the payee, your signature and proper endorsement (if needed).
People do this mistake when they want to give a cheque to someone for a future date. If you are giving a cheque to someone for a future date( post dated cheque or a PDC), please don’t forget to write the future date.
Mismatch in words and figures
While writing a cheque, you need to make sure that you have written the exact amount in words and figures for accuracy of the amount.
For example, if you wish to make a payment of Rs. 25,236/- then you need to write this in words as, “Twenty Five Thousand Two Hundred and Thirty Six Only“. Always use the suffix only!
And always write the amount in figures up to two decimal places. The proper way t write the amount in words would be:
25,236/00 or simply 25,236/-
whether you are writing a cheque or you have received a cheque and you wish to deposit that in your bank account, always ensure the above 5 things that you are not making mistakes with! And you will be able have a smooth banking experience.
Please comments in the box below if you wish to learn anything more about cheques today.
