What is a Cheque Book?

Cheque Book is a small book or a document that orders the bank to pay some amount of money to the person (beneficiary) to whom the cheque has been issued by the account holder.

The cheque book is the instrument that is used to make the payments. Here the account holder issues the cheque to a person to whom the account holder wants to pay the money.

The beneficiary will then receive the cheque and submit the same to his bank. Then his or her bank will start the process to encash the cheque into money.

What is Cheque Book?

What is Encashing the Cheque? (Clearing Cheque)

Encashing the cheque means deducting the money from the account of the person who has issued the cheque. And paying the same amount of money to the beneficiary. This money will be credited to the beneficiary’s account by the bank where the account is held.

For example, let us assume that Mr. A has issued a cheque of Rs. 1,00,000 to Mr. Z.

Now Mr. Z will collect the duly signed cheque from Mr. A and submits the same to the bank where he holds the bank account.

Then his bank will start the process of clearing the cheque. Once the cheque is cleared the amount will be credited to Mr. Z’s bank account. This is how the cheque works.

What are Requirements for Clearing the Cheque?

We now know how the cheque works. But there are some requirements that should be met for the cheque to clear or encash. The requirements are,

  • The cheque should be properly signed by the issuer.
  • The issuer of the cheque should give his full consent to his bank to pay the amount to the beneficiary.
  • The cheque should not be expired.
  • The cheque payment should not be stopped by the issuer.
  • There should be sufficient balance in the account of the issuer.

When the Cheque Expires?

The cheque expires after 3 months from the date it is issued and signed. Before this period was 6 months. But after 1st April 2012, the RBI has reduced the validity of the cheques in India to 3 months from 6 months.

What Can be Done with Expired Cheques?

In some cases, we don’t encash the cheque in time i.e. 3 months from the date of issue. There are solutions to this problem. But the issuer of the cheque has to support or assist the beneficiary in this case.

Ask for a Reissue of the Cheque

You can ask the issuer of the cheque to reissue a new one as you have not encashed the cheque. In most cases, the issuer will help you out.

Ask for a Different Mode of Payment

There are many other modes of payments in India. If the cheque you have received is expired then you can ask the issuer to make the payment using the other mode of payments.

Examples of other modes are NEFT, RTGS, IMPS, UPI, and Demand Draft.

What to Do If Cheque Book is Fully Used Up?

If you have used all the cheque leaves that were given to you by the bank. Then you can request your bank to issue a new cheque book for you.

You can also customize the number of leaves you want to have in your cheque book. (Usually there are 2 options)

Your bank may or may not charge you to issue a new cheque book.