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18. Kinds/Types of Cheque
A cheque may be of various types as the nature and purpose. The main types of
cheque are discussed below:

i. Bearer Cheque
A bearer cheque is the one, whose money
is made payable to the person who presents it
into the bank counter. It is thus, written as “Pay
to Sunita or bearer”. The serious limitation of
this sort of cheque is that any person can get the Bearer cheque
payment from the bank by just presenting it into
the counter. The bank cannot be made liable for the payment to the wrong person. This
is also, termed as an open cheque. From the security point of view, it is not safe. The
specimen of an order as well as a bearer cheque is drawn below.

ii. Order Cheque
An order cheque is the one, which is made
payable to a certain person or order of the drawer.
When the order is given to the bank to make
payment only to the person specified, it is called
an order cheque. Sometimes the ordered person
may be busy, so he can endorse the cheque and Order cheque
send to anybody else for encashment. The act of
doing signature by the ordered person in the cheque is known as endorsement of cheque.
Generally, endorsement of cheque is done at the back of cheque. After the endorsement
of cheque, it can be negotiable or transferable to others for the encashment.
iii. Cross Cheque / Crossed Cheque
The bearer or order cheque has a serious limitation/demerit that there’s no security
of the payment, as it can be paid to anybody else who presents it into the bank counter. In
order to overcome this demerit and create reliability in banking dealing, cheques began
to be crossed. Crossing of cheque is done by drawing two diagonal parallel lines on one
corner, specially the top left corner of the cheque. The effect of this is that, the cheque will
not be paid across the counter. As soon as the cheque is received, the payee should first
of all deposit it into his own account; then the bank collects the amount from the drawee
bank and then he can withdraw the amount from this bank by issuing his own cheque i.e.
the order or bearer cheque. If the payee has no account in the bank, he can deposit it in the
name of anyone having account in this bank.
There are many types of crossing. But these are commonly categorised as simple crossing
and special crossing. The following ways and terms are used in crossed cheque.

A/c Payee Only & Co. Mega Bank Ltd. Prime Bank Ltd. Nepal Bank Ltd.
Not Negotiable
A/c Payee Only

80 Aakar’s Office Practice and Accountancy - 10 Financial Institutions 81