KINDS OF BANKING

INSTRUMENTS
KINDS OF BANKING
INSTRUMENTS

Deposits or pay-in-slip
Cheques
Demand drafts
Debit and credit note
Vouchers
DEPOSITS AND WITHDRAWALS SLIP:

The deposits are made by filling up a pay-in-

slip. The form of the pay-in-slip is:
•It is used to deposit money in the bank and
returned to the depositor.
•It has the signature of the cashier, as receipt.
•It gives the details regarding the date, the
amount deposited.
 CHEQUES

A cheque is an unconditional order on the bank

made by the client instructing the bank to pay a
certain sum of money to the person named in
the cheque or his order or the bearer. This
instrument is very safe and convenient method
of making payments or withdrawing money from
a bank.
TYPES OF CHEQUES
1.OPEN CHEQUE
2.CROSSED CHEQUE
 OPEN CHEQUE:
An open cheque is one which is payable across
the counter of the bank. It need not be
paid through a bank. It can be encashed at
the counter of the bank. An open cheque
can further be of two types:
a.BEARER CHEQUE:
When a cheque is payable to a person named
in the cheque or to the bearer thereof, it is
called a bearer cheque.
For e.g.
“pay to Rakesh Kumar Garg or bearer.”
Such a cheque may be paid to Rakesh Kumar
Garg at the counter of the bank when he
presents it for payment. Mr. Rakesh Kumar
Garg can either himself go to bank for getting
payment or simply he may or may not sign at
the back side of the cheque and hand it over
to any person. Any person can go to the bank
and collect its payment. The drawee bank need
not take any pains to get the identification of
the person to whom the payment to whom the
payment is being made. A bearer cheque is
transferable merely by delivery.
b.ORDER CHEQUE:
An order cheque is payable to the person
named in the cheque or his order.
For e.g.
“pay to Rakesh Kumar Garg or order.”
Such a cheque is payable to either Rakesh
Kumar Garg or to any person whom he orders
the payment of the cheque. Order cheque is
paid by the bank only when the bank is
satisfied about the identity of the payee. An
order cheque is not transferable merely by
delivery. It cannot be transferred without
the signatures of the transferor.
 CROSSED CHEQUE:
A crossed cheque is one on which two parallel
transverse lines with or without the word ‘& co.’
‘not negotiable’…etc. are drawn. A crossed
cheque is not payable across the counter of the
bank. It must be collected through a bank. It
is paid into the bank account of a person and
cannot be encashed at the counter of the bank.
By crossing cheques safety is ensured and the
person to whom payment is eventually made can
be traced because such a cheque is always paid
into a bank account. A crossed cheque provides
protection not only to the holder of the cheque
but also to the receiving and collecting bankers.
 Types of Crossing

a) General Crossing
b) Special Crossing
Other Types of Crossing

1. Restrictive Crossing
2. Not Negotiable Crossing
3. Double Crossing
 BANK DRAFT:
Bank draft is a bill drawn either on demand or
otherwise by one banker on another in favour
of a third party or by one branch of a bank on
another branch of the same bank or by the
head office of a branch or vice versa for a sum
of money payable on demand or order. It is
also known as demand drafts as they are always
payable on demand without any days of grace
and there cannot be any bearer drafts.
They are always used as a mode of remittance
by parties for sending money from one place to
another. For the preparation of this draft bank
charges a nominal commission for this service.
DIFFERENCE BETWEEN CHEQUE AND DEMAND
DRAFT

DEMAND DRAFT CHEQUE

• It cannot be made • It may be drawn

payable to bearer. payable to bearer.
• Its payment cannot • It is countermanded
be stopped. as in case of a
cheque.
• It is drawn by a • A cheque is drawn
bank upon itself. by one person upon
another
 DEBIT NOTE

It is a document evidencing that a debit to be

raised against a party for other reasons, for
e.g., when goods are returned to a supplier or
when an additional amount is recoverable from
a customer.
 CREDIT NOTE

It is made out when a party is to be given a

credit except against the bill already received
from it. When goods are received back from
a customer, a proper credit note should be
given to him.
 VOUCHER
It is a document providing evidence of some
business transaction. It is clear from the
above definition that whenever a transaction
takes place, an evidence to that effect is
also established
Types of vouchers:
a.Source vouchers
b.Accounting vouchers
 MEANING
The act of drawing two parallel transverse lines
on the face of a cheque is called crossing of a
cheque. It is a direction to the banker not to
pay the cheque across the counter of the bank
but to pay to a bank only or to particular bank
in account with the bank.
The amount in this cheque is paid into the bank
account of the respective person whose name
is being mentioned on the cheque.
Types of crossing:
a)General crossing
b)Specific crossing
 GENERAL CROSSING
General crossing implies simply putting two
parallel transverse lines on the face of cheque.
According to section 123 of the negotiable
instruments act, 1881 says, “where a cheque
bears across its face an addition of the words
‘and company’, or any abbreviation thereof;
between two parallel lines or just two lines
without any negotiation will be considered a
generally crossed cheque.The effect of general
crossing is that payment of such a cheque
cannot be obtained at the counter of the bank,
it can only be obtained through a banker.
 SPECIAL CROSSING
A special crossing implies a direction written on
the face of a cheque to pay the cheque only if
it is presented through a particular bank
mentioned therein. the cheque is deemed to be
crossed specially. In this the amount is
transferred to the mentioned name a/c.
 RESTRICTIVE CROSSING:
It constitute a direction to the collecting banker to
collect the cheque and credit the proceeds to the
account of the payee only. Such a crossing is known
as RESTRICTIVE CROSSING. The collecting bank
has to credit the account of the payee in whose
favour the cheque is drawn.
 NOT NEGOTIABLE CROSSING:
It makes the cheque non transferable but the
effect of such a crossing is that when the
holder to a cheque transfers it to any other
person the transferee does not get a better
title than the transferor had even though the
transferee is a bonafide person who takes
the instrument for a valid consideration and
before the maturity of the instrument.

DOUBLE CROSSING:
PERSONS WHO MAY CROSS A
CHEQUE:

A cheque may be crossed by any of the following:

1. The drawee of the cheque

2. The holder of the cheque
3. The collecting banker
THANK YOU