*Update: 7th March, 2015
Writing a cheque is probably the easiest thing to do right? Well, maybe. But there some simple things we overlook while writing out a cheque to someone that can easily be misused. This post will discuss the ‘hows’ and’ whats’.
You all may think that what’s a big deal in writing a cheque? We write it so many times to pay bills, make payments etc. But there are times when people make the most obvious and sometimes careless mistakes while writing a cheque that can easily result in frauds or cheques being misused or dishonored. Let us see what the correct way to write a cheque is and how to avoid mistakes while writing a cheque.
You can also find an informative post on Why a cheque bounces or gets dishonoured, over here
Understanding various parts of a Cheque:
What is an MICR code? Where is the Cheque Number located on a cheque? Is there an IFSC code on a cheque? If you have asked yourself these questions, then here are all the answers. It can be very basic but sometimes the most basic things are the ones which are most overlooked.
This image below is of a dummy cheque which covers everything you see on a cheque, it is pretty self explanatory.
Writing a Cheque the correct way?
For understanding the ways to write a cheque correctly, we have a typical situation where you have to pay some fictional person Mr. Joy Johnson a sum of Rs. 15000 INR from your bank named SUM BANK, assuming the payment date to be 28th Feb 2013. So now let us get down to seeing how we can write all the details correctly.
1. Cancel the words ‘OR BEARER’ and Add ‘A/C Payee’ to the Top Left corner of the cheque:
Cancelling the words ‘Or Bearer’ and adding ‘A/C Payee’ to the top as shown in the image will make sure that no one apart from the person in whose favour the cheque is drawn can get the money. If you do not cross the words ‘Or Bearer’, it can be treated as a Bearer cheque and any person holding the cheque can claim the money. Imagine if a cheque is lost, all this comes in to play.
2. Do not leave any space before or in-between the Name of the Receiver. Do not leave blank space after the Name is written:
Do not leave space between the word PAY and the Name of the Receiver or in between the name and surname in this case (Joy Johnson). Doing this can give anyone a chance to add alphabets before or after the name (like in the images below) and claim the money.
Same can be done if you leave space after writing the name. (See image below).
Always strike out the space after writing the name and start as close as possible to the words ‘PAY’ and leave just bare minimum spacing in-between the names as shown in the image below.
3. Always write ‘ONLY’ at the end of writing the Amount in Words in the ‘RUPEES’ column. Also put a /- in the ‘Rupees in Number” column. Do NOT leave Spaces Anywhere:
As shown in the image below, always write the words ‘ONLY’ after the amount in words. When writing in numbers, put a ‘slash’ as separation in case there are Paisa to be paid. In case there is no Paisa, just put a hyphen after slash like this ‘/-‘ Also, just like the Name; do not leave space before writing the amounts in words as well as numbers and strike out the empty space left.
If you do not follow the above; amounts can be altered easily by the fraudster. In the image below you can see how easily certain amounts can be forged by people if the Cheque Issuer is careless.
In the example image above, Fifteen Thousand becomes ‘Fifteen Thousand Nine Hundred Ninety Nine only’ the fraudster can easily add a few strokes below ZEROs in 15,000 and get INR 999 extra.
Also in a scenario where you leave too much space between words on your cheques or do not add the ‘/-‘ sign after the amount in numbers it is very easy to commit fraud. Alphabets can be added and even numbers. See image below.
4. Do Not sign on the MICR Band:
As shown in the image above, signing in the MICR Band is WRONG and can get your cheque dishonoured. Always sign on the space provided above the Authorized Signatory text or The Name of the Account Holder as in the image below.
5. Don’t Forget the Date:
Writing a cheque without a date can enable anyone to put any date and encash the cheque at their will. This can be a problem if you do not have sufficient balance in your account right now and intended the cheque to be a post-dated cheque when that amount maybe available. The cheque will be dishonoured. Also a cheque without a date will not be passed by your bank and again will be dishonoured. Also a wrongly written date, like a wrong year or a month can often result in dishonour if the date is past 3 months.
6. Do not Overwrite:
Always remember to not overwrite, scribble or cancel anything and then rewrite on a cheque. If mistakes happen try to rectify without scribbling, and if not possible, cancel the existing cheque and write a new one carefully.
7. Keep the records of your cheques:
Always keep a record of the cheques you issue to people or cancel. Note down the cheque number and amount paid along with the name of the Payee and the Date of issue. Usually cheque book comes with a section for all this information at the back. Fill in the details and keep it handy to cross check any suspicious activity, future records, or possible fraud.
A properly written cheque can be found in this image below.
General Safety Measures for Writing a Cheque Correctly:
- Destroy all cancelled cheque unless they are used for any specific purpose like for submitting for ECS etc.
- Never Handover a cheque without entering all three: Date, Payee name, Amount of Cheque in words and Numbers.
- Sign clearly and if needed sign twice (as seen in the image above), to make sure the cheque is not bounced for a mistake in signature.
- Write the Credit Card Number, Connection Number, Mobile Number etc on the reverse of the cheque in case of payments being made towards bills for utilities.
- Do not staple, fold, disfigure, or stick the MICR Band.
Hope this post helped you all. If I have missed anything, feel free to leave your views in the Comments below.