5 tips on banking

• Crossing of cheques 

Crossing of a cheque means drawing two parallel lines across the face of the cheque, with or without any words written in between the two lines. It may be used to give certain instructions to the paying bank.      

 

Purpose of crossing

Crossing of cheques is a popular method for protecting the drawer and the payee of a cheque, preventing fraud and wrong payments.  The crossing acts as instructions to the paying bank (the bank with which you maintain your current account) to accept the cheque only to the credit of a bank account and not to pay cash over the counter. Therefore it may be easier to trace the person who obtained payment in the case of a dispute as to the true owner of the cheque 

 

Open cheque

An open cheque on the other hand, is a cheque that is not crossed. It allows the bank to pay the money to whoever who presents it, even if that person found or stole it, unless the bank is put on notice that the cheque might have fallen into wrong hands. Accordingly if you are writing a cheque, it is safer to cross it, unless you propose to present it to the bank at the counter for drawing cash. Issuing open cheques makes it easier for someone other than a true owner to obtain payment without being detected.

 

Types of crossings

There are two categories of crossings: General Crossings and Special Crossings. Crossing of a cheque with two parallel lines, without any words or with the words ‘& Co’, ‘A/C Payee only’, or ‘not negotiable’ written between the parallel lines is referred to as a General Crossing. However, a cheque may bear a Special Crossing when a certain bank may be made named in the crossing.  If so, the cheque must be collected through the bank named in the crossing. The words ‘& Co’, ‘A/C Payee only’, or ‘not negotiable’ may be included in a Special Crossing, in addition to the name of the collecting bank. 

 

‘Not Negotiable’ crossing

The inclusion of the words ‘Not Negotiable’ in the crossing helps the true owner of the cheque if it is lost or stolen to retrieve the funds from, the person to whom it was paid. Anyone who accepts a cheque crossed ‘Not Negotiable’ has no better right or title to the cheque than the holder or the thief. The bank that had collected the cheque may be liable to refund the amount of the chequeto the true owner, even if he or she has given the finder or thief value of the cheque and is innocent of any wrong doing. The bank will be liable for conversion, if it had acted negligently. 

 

‘A/C Payee Only’ crossing 

The words ‘Account Payee Only’ in the crossing serves as a warning to the collecting bank not to accept deposit of the cheque except to the account of the named payee. Banks will not ordinarily accept such cheques even if it has been signed on the back by the payee and given to another person to be paid into that other person’s bank account. 

(Please note that this is based on current practices and may vary from bank to bank.)