Federal Bank: Money Withdrawal Through Cheque

Withdrawing money through a cheque is a traditional way of banking. The usage of cheques has decreased drastically as digital banking has invaded the banking sector. However, some people still prefer banking through cheques because they provide a secure and convenient way to transfer money, reducing the risks associated with carrying large sums of cash. Cheques also create a paper trail that helps individuals and businesses maintain accurate financial records. It can also be used as bill payments, making purchases, or settling dues. 

Elements of a cheque

Date

The date on which the cheque is written. This can be the current date or a future date (post-dated cheque).

Payee

The name of the person or entity to whom the cheque is written.

Amount of money that is to be sent (both in words and numerical value)

Drawer's Name

The name of the person who writes and issues the cheque, also known as the drawer.

Drawer's Signature

Without the signature of the person who is writing the cheque , it will not be valid.

Drawee Bank

This is the name of the bank where the sender holds the account

Account Number

This is the account number associated with the cheque, from which the funds will be withdrawn.

Cheque Number

A cheque number unique identification number for the cheque, used for tracking payments.

MICR (Magnetic Ink Character Recognition) Line

This line at the bottom of the cheque and it contains important information such as the bank's routing number, account number, and cheque number, in a format that can be easily read by machines.

Bank's Logo and Address

The bank's logo and often its address may be printed on the cheque.

Crossing

A cheque can be crossed with two parallel lines, indicating that it can only be deposited into the payee's bank account and cannot be cashed. This adds a layer of security.

"Account Payee" or "A/C Payee"

Writing "Account Payee" or "A/C Payee" on the cheque restricts it to deposit only, making it more secure.

How to write a cheque and withdraw money?

Follow these steps to fill out a cheque. 

1. First, write the date on which you issue the cheque or a future date in case of a post-dated cheque. 

2. Write the name of the payee that is the recipient.

3. Fill out the amount you wish to pay in words and also in numbers.

4. Put your signature on the cheque leaf. The signature should be the same as used with your account.

5. Submit it to the bank counter and the withdrawal will be processed. 

It is very important to keep a record of the cheque number. It can be used as a reference for many purposes in the future. Following is some of the importance of cheque number.

Identification

Each individual cheque within the cheque book can be identified by this cheque number. It helps you keep track of the cheques you've written.

Record Keeping

 When you write a cheque, you should record the cheque number along with the payee's name and the amount in your chequebook register. This helps you maintain an accurate record of your transactions.

Tracking Payments

The cheque number allows you and your bank to track the specific payment associated with that cheque. It is always good to check your account balance regularly. This will help you maintain stress free banking experience.

There are several options to check balance such as mini statement, UPI apps, ATM, passbook, etc. The first three options are time effective as it can be done anywhere. If you want a physical receipt of your account balance, you can visit a nearby ATM or any bank brach and get your passbook updated. You can know more about federal bank passbook by visiting their official website https://www.federalbank.co.in/.

Security

Cheque number gives security. It makes it difficult for someone to alter the details of your cheque such as the names and the account number.

Stop Payment

In case you lost the cheque or it’s stolen and you need to stop payment on a cheque, you'll need to provide the cheque number to your bank. They can then prevent the cheque from being cashed or deposited.

Cheque withdrawal limit

Different banks may have varying policies regarding cheque withdrawal limits. And, depending on the type of account, it may also vary. We can say most of the banks have a cheque withdrawal limit of 2 Lakhs per day. 

Different types of cheque

There are several types of cheques that varies depending on the nature of the cheque and whom it is written to. Here are some of them.

1. Bearer Cheque:

 This type of cheque is can be encased by the person who holds it. It is already indicated by the term "bearer" on the cheque. 

2. Crossed Cheque:

 A crossed cheque has two parallel lines drawn across the cheque leaf. It indicates that the cheque can only be deposited into the payee's bank account and cannot be encashed directly. This adds a layer of security.

3. Open Cheque: 

An open cheque is not crossed or marked "not negotiable." It can be encashed over the counter at the bank by the payee.

4. Post-Dated Cheque: 

A post-dated cheque bears a future date, and it can only be cashed or deposited on or after that date.

5. Stale Cheque: A stale cheque is one that is presented for payment after a certain period, typically three to six months, from the date of issue. Banks may not honour stale cheques.

6. Traveler's Cheque: 

If your are travelling somewhere it's better to carry a cheque than cash. They are considered a safer way to carry money while traveling as it can be replaced if lost or stolen.

7. Banker's Cheque or Demand Draft: 

These are issued by a bank and are guaranteed payment. These type of cheques are often used for larger transactions and are considered more secure than personal cheques.

8. Self Cheque 

A self cheque is drawn in favour of the account holder. It allows the account holder to withdraw funds from their own account. It's often used for cash withdrawals.