I know whoever have bank account might have came across these two words while writing cheque or interacting with the bank. But do you know the difference between these two and how and at what time one must opt for these two facilities of writing cheque?
Before proceeding further, first let us understand the parties involved in cheque transactions. There are mainly three parties involved in cheque transactions and are as below.
1) Drawer-He is a person who holds the account and has written and signing authority on cheque. Therefore, he issues cheques of his bank account. He is directing banks to pay a certain amount of money to the certain person or to the bearer of the cheque. Therefore, in simple words, you may say that a person who holds the bank account and who sign on cheque is called the drawer.
2) Drawee-Drawee is a party upon whom the cheque is written. The drawee is your bank. So drawer is giving instruction to drawee to pay an amount mentioned on the checque to the person named or to the bearer of the checque. When your bank follows the instruction and pay the cash to the person whose name mentioned on cheque or to the bearer of cheque then it is called as “cheque is honored”. If payment not done, then it is called “cheque dishonored”.
3) Payee-He is a person to whom the payment will be made. His name will be mentioned on cheque, so he is an authorized person to receive cash. So if drawer himself need to withdraw cash from his account using cheque then he need to write as SELF in the payable field of the cheque. In such case drawer himself becomes payee.
From above image, you notice how to change the normal cheque leaf into crossed cheque. Once you cross the cheque and mention the payee name (in above example, it is my name) then I can only encash this cheque by depositing to my Bank Account. However, do remember that in crossed cheque payee is free to make a further endorsement. For example, in the above example payee name is mine. Instead of cashing it to my bank account I can further endorse the cheque to anyone, for example to Mr. Satish by writing and signing on back of cheque leaf. Further Mr.Satish either can encash this cheque or he can endorse to someone, for example to Mr.Rohan by writing and signing on back of cheque leaf.
So by mere crossing you are no longer making payment to PAYEE ONLY. The payee can further endorse or cash it according to his wish. Also in case of dishonor of cheque (in the above example), Mr.Rohan can sue Mr.Satish and in return Mr.Satish to me and finally I can sue to the drawer of cheque.
You notice that along with crossing two lines at the corner you also need to write as “A/C Payee Only”. If you do so, then one can’t endorse the same cheque to others. So in the above example, the cheque must be encashed by depositing to payee account (In the above example it is in my name). This makes secure payment to payee only, but any other third parties. This protects any misuse of cheque.
In below image, I mentioned few best practices while writing cheque. Hope it will be helpful for you.
Are your Gold and Silver ETFs a ticking time bomb? Why ETFs crashed 24% while…
Is Parag Parikh Large Cap Fund a hidden goldmine or just hype? Discover the 5…
An IIT topper and his doctor wife were duped of Rs.14.35 crore in Delhi’s biggest…
Understand the new NPS exit and withdrawal rules 2025, higher lump sum limits, lower annuity…
A simple and updated guide to taxation of gold and silver in India in 2026…
Explains NPS MSF Framework, eligibility, migration rules, fund selection, risks, and whether long-term investors should…
View Comments
Dear I have issueing cheque to party by ac payee how can I stop clearing cheque of B party.
How much time take to clearing
Dear Umesh,
Can you elaborate more?
I have received a/c payee cheque mentioned with account number. That account number is belongs to Paytm payment bank. Now Paytm payment bank not accepting cheque deposit. May i go for the bank in which the cheque belongs.
Dear Ila,
Approach the issuer to reissue a new cheque with your existing account.
Hi sir, I have given a blank signed cheque to a person without crossing it . Now Can he take money from account or will I get notified by bank before the cheque gets cleared
Dear Ravi,
He can take a money.
If i use a cheque of my saving account of post office to deposit money in my ppf account and while writing self in payee option, and if not use a/c payee option and do not cut the bearer option. Does it possible, the man at the counter
withdraw my money by using my self cheque.
Dear Jaswinder,
The man at a counter may withdraw or not depending on whom you are handing over the cheque.
My home is at kolkata, now I am doing job in pune and my company given to account pay salary check and there was added my name with my father name
ex. Rajesh Modal is my name but this check is Rajesh Niloy Mondal.
My father name is Niloy Mondal
In that case my check is bounce or not.
Dear Rajesh,
I think it will not bounce.
Hi i got a ac payee cheque named as Badal but in my bank account my name badal kumar the cheque will be clear or not ?
Dear Badal,
I think YES.
A had to pay a sum of 10 lacs to B. for which he issue a cheque of sbi crossing it line. B doesn't have an account in sbi. what are the options available with B to encash it?
B have to open a SBI account for receiving that sum
Dear Komal,
As I already mentioned above (and in below comments also), he can deposit the cheque where he has an account for collection.
I deposited a SBI SB A/c cheque Rs.50K We have an sufficient fund in this account ( from my mother account) transferring to my Account ( i.e.Son Account )to HDFC SB A/c. cheque returned unpaid due to drawer signature differs. Please explain me this is possible to return to the Cheque.
Can I question banking. To which bank should I ask. Either SBI or HDFC Bank
Dear Raghu,
Yes, if the signature differs then the cheque may return. Check with SBI Bank.
What step will be taken by bank, if someone provide me a bounce cheque ( insufficient balance)???
Dear Sapn,
I am not an expert to guide a bank about its responsibilities and procedures to follow.
an account payee crossed cheque is presented for payment over counter.What should I do as a banker in this case?
Dear S,
Follow the above post again.