Account Payee or Restrictive Crossing
- Writing “Account Payee” or other restrictive instructions between the crossing on a cheque signifies that the payment should be credited directly to the bank account of the specified payee.
- This adds an extra layer of security and ensures that the funds reach the intended recipient securely without the possibility of diversion.
- Account payee crossing helps prevent unauthorized encashment by requiring the cheque amount to be deposited into the payee’s designated bank account.
- It minimizes the risk of fraud and misappropriation of funds during the payment process.
Crossing of Cheques (Negotiable Instruments Act)
Crossing of cheques is a fundamental practice in the area of banking and finance, essential for enhancing security and regulating the payment process. It involves drawing two parallel lines across the face of a cheque, which signifies that the payment should be made through a bank account and not in cash. This act serves as a protective measure against fraudulent encashment and unauthorized transactions. The Negotiable Instruments Act, 1881, governs the crossing of cheques in India, providing legal guidelines for their usage and implications. Understanding the types and concepts related to the crossing of cheques is crucial for ensuring the integrity and reliability of financial transactions within the banking system.
Key Takeaways:
- Banker and Customer Relationship: Crossing cheques is a vital aspect of the relationship between a banker and a customer, ensuring secure and regulated payment transactions.
- Types of Crossing: Cheques can be crossed in different ways, including general and special crossings, each providing varying levels of security and payment restrictions.
- Account Payee or Restrictive Crossing: Writing “Account Payee” between the crossing signifies that the payment should be credited only to the account of the specified payee, enhancing payment security.
- Not Negotiable Crossing: Adding “Not Negotiable” to the crossing restricts the transferability of the cheque, preventing further endorsement or transfer to another party.
Table of Content
- What is Crossing of Cheques?
- Banker and Customer: Crossing of Cheques
- Types of Crossing of Cheques
- Account Payee or Restrictive Crossing
- Not Negotiable Crossing
- Liability and Protections for Bankers
- Rights of Holder Against Banker
- Conclusion
- Crossing of Cheques- FAQs