What Is Bearer Cheque?

A cheque is an instrument which is drawn in favour of a person or a company to make payments on a specified date. A cheque is issued to make payments from one account to another and is generally used to make safe, secure and convenient payments. It reduces the need of hard cash in payments and helps transfer large sums of money.

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What Is Bearer Cheque?

What Is Bearer Cheque?

As the name suggests a bearer cheque is payable to the bearer of the cheque. A bearer cheque does not have any name designated as the payee and the person having a bearer cheque can go to the bank for encashment. A bearer cheque does not have any name written on it, but just the amount authorized for withdrawal. Bearer cheque can be transferred by mere delivery; there’s need of endorsement. In simple words a cheque which is payable to any person who presents it for payment at the bank counter is called 'Bearer cheque'.

How to write a bearer cheque:

Writing a cheque is very simple. The image given below demonstrates the fields that are present in a cheque.

• You must first mention the date on which the cheque is issued.
• As the bearer cheque does not contain the name of the bearer, the issuer must write ‘self’ or ‘pay to the order of cash’
• You have to mention the amount of money you want to pay in the rupees section. Make sure to write ‘Only’ after writing the amount in words. Do not leave space before writing the words in numbers and strike out the empty spaces.
• Mention the amount of money in numbers and put ‘/- ‘ mark at the end
• Finally sign on the space provided above the Authorized Signatory text 

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Bearer cheque withdrawal rules:

A bearer cheque is generally drawn in favour of a payee whose name is not mentioned on the cheque. So handling these kinds of cheques can be risky, because if a bearer cheque is lost, the person who finds it becomes the bearer of the cheque and is eligible to collect cash from the bank. So there are certain rules for withdrawal of bearer cheques:

• According to the RBI guidelines, in case a transaction is being carried out by a non-account based customer or a walk-in customer where the amount of money is equal to or exceeds Rs 50,000, the bank must verify the customer’s identity and address before disbursing cash.
• The bank should not ordinarily insist on the presence of account holder for making cash withdrawals in case of ‘self’ or ‘bearer’ cheques unless the circumstances warrant it. The banks should pay self or bearer cheques taking usual precautions.
• Reserve Bank has cautioned banks in the country to be careful while encashing the bearer cheques, if the amount exceeds Rs 50,000 and insist on the KYC verification of the customer in such an event.
• In case an individual is tendering the instrument and is not carrying any identity proof or address proof and there is urgency to pay, then the transaction must be referred to the branch manager. The branch manager shall make appropriate enquiries with the payer/ the account holder and shall use his discretion to allow the transaction.

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Bearer cheque withdrawal limit:

There is no specified withdrawal limit on bearer cheque. In case a company or a firm draws a bearer cheque to withdraw funds for the payment of salaries to employees, the bank generally accepts the bearer cheque of higher amount and disburses cash. But a bearer cheque drawn in favour of an individual has some limitations. In case of a bearer cheque of withdrawal amount of above Rs 50,000, then the bank must verify the identity and address of the individual before disbursing the cash.

Cash payment of bearer cheque:

A bearer is payable to a person in possession of such an instrument. The bank cannot deny payment of bearer cheques. However, before payment, the bearer is required to sign on the back of the cheque as a token of having received the amount.

What is difference between Order Cheque and Bearer Cheque?

Cheques are an instrument that contains an order to pay a specified sum of money to the drawee’s account. Given below are the main differences of a bearer cheque and an order cheque:

• The bearer cheque does not contain the name of the payee and is payable to the person who presents it to the bank. Whereas an order cheque is a cheque drawn in favour of a specific individual or person and the cheque can be presented to the bank for encashment only by the specified individual.
• In case of a bearer cheque, the bank must make proper verification before making payment to the bearer of such an instrument. In case of order cheque, the name of the individual is already mentioned on the cheque. So the money is paid to the specified person only.
• Bearer cheque can be transferred by mere delivery as they need no endorsement, whereas an order cheque can be transferred only by endorsement and delivery.

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