How does a cheque work ?

[praful47]

Being on this forum , I have learned many things about bank accounts , credit cards and debit cards.
One thing that I don't have the knowledge is about the cheques facility.
How does a cheque work and in what cases we can use cheque.

Eg : if someone gives cheque of ICICI Bank to me then where should I go with that cheque in my bank or ICICI branch ?

How can a cheque be cleared faster ?


Also , this thread will help to solve the queries related to cheques .

 

[helloworld]

What I see recently..

- Cheques can be used as legal as bounce case, incase not cleared within time.

// Hence banks usually request cheques when availing loans and utilize same when not paid on time.

- Cheques can also work for later payment.

// can provide cheque with 1 or 5 or 10 months later date, which gives lender confidence that money will be there and if not can use as bounce case (double security).

- Cheque has to be deposited on same bank (same branch for faster clearance but that doesnt matter much).

// in your example its icici where u have to deposit.

- Cheques are not faster when compared to NEFT, UPI.


// bank verifies the cheque and account balance, and if sufficient funds are available, the amount is transferred to the payee's account. it takes 24 hours.

 

[praful47]

What I see recently..

- Cheques can be used as legal as bounce case, incase not cleared within time.

// Hence banks usually request cheques when availing loans and utilize same when not paid on time.

- Cheques can also work for later payment.

// can provide cheque with 1 or 5 or 10 months later date, which gives lender confidence that money will be there and if not can use as bounce case (double security).

- Cheque has to be deposited on same bank (same branch for faster clearance but that doesnt matter much).

// in your example its icici where u have to deposit.

- Cheques are not faster when compared to NEFT, UPI.


// bank verifies the cheque and account balance, and if sufficient funds are available, the amount is transferred to the payee's account. it takes 24 hours.

If I deposit cheque other than icici what will happen?

 

[helloworld]

If I deposit cheque other than icici what will happen?

they'll send to ur bank, ur bank will verify and if sufficient balance, t/f to payee (in this case most likely u need to have account in that wherever u depositing cheque and payee should be u).

But its lengthy process and take 3-4 working days.

 

[Trust Me]

if someone gives cheque of ICICI Bank to me then where should I go with that cheque in my bank or ICICI branch ?

You deposit it in your account in any bank whatsoever (in any branch). It will usually clear in a couple of days.

- Cheque has to be deposited on same bank (same branch for faster clearance but that doesnt matter much).

Only required in case of a bearer cheque (meant for people with no bank accounts).
Since the OP has account(s) in other bank(s), he can deposit there as an account payee cheque.

If I deposit cheque other than icici what will happen?

Actually you deposit it in whichever bank you have your account with (in any branch).

they'll send to ur bank, ur bank will verify and if sufficient balance, t/f to payee (in this case most likely u need to have account in that wherever u depositing cheque and payee should be u).

Actually, the days of sending cheques physically are long over. Cheques are cleared now via images and through a regional clearing house. Still takes 2-3 days to have the money in one's own account (although the money from the payer account is debited in one or two days). Clearing actually takes very little time. It's the payer and payee banks' overhead that delays actual credit.
.

 

[Abhi21]

Adding to the above, ppl generally issue cheque so that they can arrange the funds in mean time.
Scenario 1
Eg. 10,000/- cheque dated 15/04/25.
Party A (hdfc) issues to party B (sbi)
Considering from different banks
Party can't deposit the cheque in his sbi bank untill date is 15/04 or further to the max 6 months period time (15/10/25).
So party A gets enough time to arrange 10k n deposit the money in his bank.
Cheque clearance 2 business working days if deposited in morg hours of the bank.

Scenario 2 :

Party A and Party B of same bank. (SBI)
Cheque deposited timing 10:30-14:30 hrs. Then cheque clearance will be of same day provided cheque date matches the current date n further.

Scenario 3:
You can take out the cash.
Self payee
Party A(hdfc) issues cheque to party B ( no account in any banks or doesn't want to put the cheque in his bank)
Party B takes the cheque to the party A's bank i.e HDFC and withdraws cash provided date matches with current date n further and also Party A sign needed at the back of the cheque and if it's >=50,000/- Pan card copy n ID copy required of Party A (verification purpose along with attested one).
Cash withdrawal limitations depends on the bank.

In both the cases name of the cheque shld be Party B's name.
In scenario 3 name of the cheque should be Party A's name

This financial year. Something called
CTS (Cheque Truncation System)
A Project by the Reserve Bank of India (RBI) to improve the efficiency and speed of cheque clearing.

Physical movement of cheques is stopped. Instead, an electronic image of the cheque is used for processing.

Speeds up the cheque clearance process.
Reduces fraud and errors.
Uses secure systems to verify and process cheques digitally.

How it works:
You deposit a cheque at your bank.
The bank scans it and sends a digital image to the clearinghouse.
The image is sent to the drawee bank for verification and approval.
ONce approved, funds are credited.

 

[praful47]

Adding to the above, ppl generally issue cheque so that they can arrange the funds in mean time.
Scenario 1
Eg. 10,000/- cheque dated 15/04/25.
Party A (hdfc) issues to party B (sbi)
Considering from different banks
Party can't deposit the cheque in his sbi bank untill date is 15/04 or further to the max 6 months period time (15/10/25).


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6 months is validity timing ?
But if the cheque gets deposited on 15.04 and there are no available funds in account... Then that cheque will bounce .