Friday, April 24, 2009

PRECAUTIONS TO TAKE WITH YOUR CHEQUE BOOK

Of late there have been numerous incidents of fraud reported involving the misuse of cheque books. The miscreants use the cheque leaf of someone else and then forge the signature of the customer and siphon off the money. In some cases, the cheque leaves are stolen from the drop boxes and then a bogus account is opened in some bank to en cash this cheque thereby defrauding the customer. The point I am making is that cheque books are as good as currency and needs to be guarded like we guard our cash .Besides being careful of the physical security of the cheque book what else can you do to ensure that its not misused against you ? There are certain precautions that you can take in this regard:-
1. A cheque is a written instruction you give to your banker to make payment by debit to your account on demand. Always cross the cheque making it account payee. This will limit the chances of it being misused.
2. Cheque is a valid payment instrument from the date shown on the face of it. By banking practice six months is treated as normal validity of a cheque. So never forget to mention the date while issuing a cheque.
3. A Bearer cheque is payable to the holder. An Order cheque is payable to the person on whose favour it is drawn or subsequent endorsees. So banks seek identification of the person receiving payment of an order cheque. So, issue the relevant cheque depending on the usage.
4. Banks verify the signature on the cheque with your specimen signature on record before making payment. Make sure that your signature is not very simple and also is not known to all and sundry. Best strategy would be to use separate signature for your bank account and separate signature for all your other official works.
5. Take proper care of your cheque book. A signed bearer cheque getting into wrong hands would mean a loss! So stay away from issuing bearer cheques.
6. Report loss of cheque to your bank immediately and give Stop Payment instruction to them.
7. Do not issue cheques without adequate balance in the account or arrangements to pay. Dishonour of cheque for insufficiency of funds or exceeding amount arranged to be paid, is a criminal offence punishable with imprisonment for a period upto one year or with fine which may extend to twice the amount of the cheque.

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