Cheques Validity Cut Short

We all know what a cheque is and how to use it. You can revisit the post titled “Using a Bank Cheque” to know more about the same. To revisit the post click here

Ok, coming back to topic, as you might already know, Cheques have a validity period after which it is worthless. Such a cheque is called a STALE cheque or an EXPIRED cheque. If you had read my previous post, you will know that cheques are valid for 6 months or 180 days from the date of cheque issue. However, with a recent RBI Ruling, this is set to change.

Reduction in a Cheques Life-Span

Starting 1st April 2012, all cheques and drafts issued by banks in India will be valid only for 3 months. This essentially means that, you can cash cheques or drafts only for 90 days from the date of issue (date on the cheque) and beyond the 3 month duration, the cheques are considered stale and would be worthless.

Why this sudden ruling?

The Reserve Bank of India (RBI) has said that, some people were taking undue advantage of this long (180 day/6 month) validity period and floating/circulating these instruments in the market like cash. So, in the interest of public safety, the RBI has reduced the validity of such instruments to 3 months from the date of issue.

From When is this Validity Ruling Effective?

All cheques and drafts issued in India dated 1st April 2012 or later will have this validity ruling. Banks will also have to mention this 3 month validity condition in all cheques and drafts issued by them.

How does this affect us?

If you are someone who uses cheques for making payments on your credit card or for an occasional transaction with a friend or a relative, this ruling has no effect on you. In almost all cases, we usually cash the cheque as soon as we get it. However, for people who accept post dated cheques for loan repayments or for any other reason, this ruling comes as a huge blow. They have to closely track the expiry date of these instruments and cash them on time in order to receive the payment.

Happy Using Cheques!!!

Using a Bank Cheque

Many of us use cheque’s issued by banks in our day to day financial activities but some of us are still not sure of how to use them properly and how to avoid misuse of cheques. The purpose of this article is to outline what a cheque is and how to prevent misuse of our cheques.

What is a Cheque?

A cheque is a negotiable instrument that can be issued by one person to pay money to another person/entity. The person to whom the cheque is issued is entitled to receive the sum mentioned in the cheque (provided the account has sufficient balance) from the bank where the cheque issuer holds his account.

Who can issue Cheques?

Anyone who holds a valid bank account can issue a cheque to make payment to anyone or any organization. The most important thing to note here is that – WE NEED TO MAINTAIN SUFFICIENT BALANCE IN OUR ACCOUNT TO PAY THE CHEQUE. ISSUING CHEQUES WHILE THERE IS NO SUFFICIENT BALANCE IN OUR ACCOUNT IS AN OFFENCE AND WE CAN BE JAILED FOR IT.

What are the important things to note while writing a cheque?

There are a number of important things that we must keep in mind while writing a cheque. They are elaborated below.

1. Remember to Cross the Cheque

Crossing a cheque means putting two parallel lines on the left hand top corner of the cheque. This means that, the cheque is a Account Payee cheque which means it can only be deposited into another account and cannot be exchanged for cash over the counter. This serves two purposes – you can keep a track of who encashed your cheque and also ensure that even if the cheque is lost, it cannot be misused by anyone. The person to whom the cheque was paid will be recorded.

2. Write the Name of the person to whom the cheque is to be paid in full

It is very important to state the cheque payee’s name in full without missing any part of the name in the “pay to line” The name entered here should match the name under which the person holds a valid bank account. If there is any mismatch or spelling mistake the cheque will not be paid

3. Write the amount to be paid both in numbers and words

It is advisable to write both the number value as well as value in words in the cheque. Also care must be taken to ensure that there are no leading or trailing blank spaces while entering these values which might cause tampering of the cheque and modification of the cheque value

4. Write the cheque date promptly

Do not issue cheques that do not have a cheque issue date.

5. Sign the cheque at the bottom right hand corner with the exact signature that is registered with the bank records.

If there is even a slight mismatch between the signature in the bank records and that in the cheque the bank will not release the payment.


Apart from these points, there are some other questions that might arise while using a cheque.

1. Can we overwrite/edit/alter the details in a cheque?

Preferably NO. It is advisable not to rewrite/overwrite any contents in the cheque. But if situation warrants, we must counter-sign near the altered area to confirm that it was a legitimate change done by the cheque issuer. Any unsigned modifications in the cheque would make the cheque unusable and the bank will not release any payments.

2. Can we issue blank cheques?

The answer is a BIG NO. DO NOT issue cheques to anyone that does not contain a cheque value.

3. How long is a cheque valid?

Cheques are valid for 6 months from the date of issue. Any cheque that was issued more than 6 months before from the current date is termed a stale dated cheque and the bank will not pay them.

Note: Starting April 1st 2012, all cheques and drafts are valid only for 3 months from the date of issue. This 6 month validity will cease to exist after that date. Click here for more details

4. What should I do if one of the cheques I wrote is lost?

Call up the bank customer care or visit your nearest branch and provide the cheque number(s) and issue a stop payment requests. It is our responsibility to keep these safe and if anyone uses our cheques after we lose them, the bank will not accept liability

Cheques are very powerful instruments and improper usage of these can result in financial losses due to malpractice. Hence use them safely and with caution.