PRESENTATION

ON
PAYMENT &COLLECTION OF
CHEQUES

CHEQUE
Cheque is an important document that an individual,

companies, governments and many others use to transact their

business. By definition, cheque can be termed as a negotiable
document to transfer money either in physical form or to effect
inter account transfer.
"Cheque is an instrument in writing containing an
unconditional order, addressed to a banker, sign by the person
who has deposited money with the banker, requiring him to
pay on demand a certain sum of money only to or to the order
of certain person or to the bearer of instrument."

Essentials of Cheque
It is an Instrument in writing, i.e., it must be written in Ink and

not by pencil.
It must be Drawn on Particular Bank. It is drawn by a
customer who has deposited money with the Bank.
It must not contains any conditions.
It must be signed by the Account holder.
It is always payable on demand.
It must contain an order to pay certain sum of money
A Cheque is payable to a Specified Person Only

Payment Orders (Checks)

DATE

MAKER (DRAWER)

CHECK
NUMBER

AMOUNT

PAYEE

CURRENCY

DRAWEE
BANK

DRAWEE BANK
NUMBER

ACCOUNT NUMBER

AUTHORIZED
SIGNATURE OF
MAKERS AGENT

 All the outward clearing cheques are entered in the system as sets.

All the instrument details like date of instrument, branch details,

type of instrument etc. will be entered in the instrument details.
A clearing schedule of 200 instruments per batch (as per RBI) will

be prepared.
On the MICR BAND of the cheque (MAGNETIC INK CHARACTER

RECOGNITION) the amount of the cheque is again entered through

a machine called encoder machine and the process is called
encoding. This is done at branch level or at service branch level.
All the cheques from all the branches of a particular bank will be

sent to the service branch. These cheques are then sent to RBI on
the same day.The cheques are sorted bank wise and branch wise
at RBI through sorter machines.

Transactions
There are three types of transactions in
banking.
1. Cash transaction.
2. Clearing transaction
3. Transfer transaction

Cash transaction.
In banks, cash will be kept in a safe under dual
control of Head Cashier and Officer. This is called
as the Cash on Hand or the closing cash figures of
a branch.
Eg: When a customer is depositing Rs.1000/- in his
account the following entries are passed
CR Customer a/c Rs.1000/DR Cash on hand a/c Rs.1000/
When Rs.1000/- cash is withdrawn from the a/c
DR Customer a/c Rs.1000/CR Cash on hand a/c 1000/-

Clearing transaction
When there is a transaction between accounts of the

same branch/bank without any physical cash, such

transactions are called transfer transactions. In one
transfer batch the total debit should always tally with
the total credit.
Transfer transactions are generally of two types Intra
Branch Transfer and Inter Branch Transfer.
-Intra Branch transfer is one which happens between
two accounts in the same branch
-in case of Inter Branch transfer, transfer is affected
among two accounts of the same Bank but of different
branches.

Transfer transaction
When a customer deposits a cheque of some other bank of

the same city, the amount will be credited to that account

through clearing transaction. Clearing transactions are done
at clearing house. Each city will have a clearing house at
Reserve bank of India. Each bank will have to be a member
of this clearing house. All scheduled banks are allowed to
become a member of clearing house. The member bank will
have a current account with the clearing house (RBI)

When a customer tenders local chques of other banks,

these cheques are sent to the respective banks through

clearing transaction. The link branch for doing the clearing
transaction of a bank is called the service branch. Each bank
will have their service branch.