Saturday, September 24, 2011

PRECAUTIONS TO TAKE WITH YOUR CHEQUEBOOK

We all use our cheque leaves while making payments to various parties/paying bills etc , but, have we ever wondered what all can go wrong with these cheque leaves? There have been numerous cases of fraud , where the modus operandi has been misuse of the cheque leaf. Hence it is imperative to know ,first, what all can go wrong and then what safeguards to take with your cheque leaves.

What Can Go Wrong?

1. Cheque can be misused - Lot of fraudsters tamper with the cheque which one writes by adding a name of account number , making alteration, adding digits etc and then countersigning on it. This way they loot the unsuspecting guy , his hard earned money.

2. Cheque can be assigned - Since cheques are negotiable instruments , it can be assigned from one person to another and as such , one can simply cut the beneficiary name and assign the cheque in ones own name and then bank it with his own banker. This was he wont have to forge the drawers signature. He simply will have to sign for the beneficiary and since the beneficiary's account may not be with the presenting bank /accepting bank , it is difficult to spot the fraud. But thankfully only few cooperative banks do accept cheques which are "assigned to third party".

What safeguards to take?
1. Always keep chequebook in safe custody - This is the most basic precaution that one must take. Safe custody of the cheque book will ensure that it does not reach in rogue element's hands easily and thus the chances of its misuse is that much lesser.

2. Always give "Account Payee" cheque - Wherever possible avoid giving "Self" or "Bearer" cheques since that opens up lot of possibility of fraud. Anyone with that cheque can go to any branch and get that encashed since it is an open cheque drawn in favour of the presenting party without mentioning its name. So avoid it.

3. Always write the name of beneficiary - Always mention the name of the beneficiary to whom the cheque is being issued. This will enable the bank to cheque Identity details of the presenter in case of any doubt etc. Also as a prudent banking practise, banks do check ID proof before giving large value cash withdrawals to unknown person. So a name on the cheque rather than just"Self" or " bearer" would help.

4. Never leave Blank spaces in the cheque leaf - Always try to use the full space of the cheque without leaving any space which may be used later for adding name or account number etc. You may cancel the empty space by striking it with a line .


5. Dont hand over PDCs to sales executives - In lot of fraud cases, Sales executives from Bank DSAs collect PDCs from the customer even before the loan is disbursed/or is about to be disbursed. These cheques then are used by the executives to siphon off the funds from the customers account. Hence, avoid giving PDCs to executive, you must give it to the branch or loan disbursal centre with proper acknowledgement. Also never give cheque without any beneficiary details (lot of people do it) since execs tell them that they will fill that portion later. The same portion may be used by execs to write their own name and thus they are able to withdraw amount from unsuspecting customers.


If you follow these basic guidelines, then I am sure you will be able to stay out of these fraudsters who are out to make quick buck at your expense.


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