KINDS OF

BANKINGINSTRUMENTSINSTRUMENTS
KINDS OF BANKINGINSTRUMENTS
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 andreturned to the
depositor.
It has the signature of the cashier, as receipt.
It gives the details regarding the date, theamount deposited.
CHEQUES
A cheque is an unconditional order on the bankmade by the client
instructing the bank to pay acertain sum of money to the person
named inthe cheque or his order or the bearer. Thisinstrument is
very safe and convenient methodof making payments or
withdrawing money froma bank.
TYPES OF CHEQUES
1.OPEN CHEQUE
2.CROSSED CHEQUE
OPEN CHEQUE:An open cheque is one which is payable acrossthe
counter of the bank. It need not bepaid through a bank. It can be
encashed atthe counter of the bank. An open chequecan further
be of two types:

a.BEARER CHEQUE:
When a cheque is payable to a person namedin the cheque or to
the bearer thereof, it iscalled a bearer cheque.
For e.g.pay to Rakesh Kumar Garg or bearer.Such a cheque may
be paid to Rakesh KumarGarg at the counter of the bank when
hepresents it for payment. Mr. Rakesh KumarGarg can either
himself go to bank for gettingpayment or simply he may or may
not sign atthe back side of the cheque and hand it overto any
person. Any person can go to the bankand collect its payment.
The drawee bank neednot take any pains to get the identification
ofthe person to whom the payment to whom thepayment is being
made. A bearer cheque istransferable merely by delivery.
b.ORDER CHEQUE:
An order cheque is payable to the personnamed in the cheque or
his order.For e.g.pay to Rakesh Kumar Garg or order.Such a
cheque is payable to either RakeshKumar Garg or to any person
whom he ordersthe payment of the cheque. Order cheque ispaid
by the bank only when the bank issatisfied about the identity of
the payee. Anorder cheque is not transferable merely bydelivery.
It cannot be transferred withoutthe signatures of the transferor.
CROSSED CHEQUE:
A crossed cheque is one on which two paralleltransverse lines
with or without the word & co.not negotiableetc. are drawn. A
crossedcheque is not payable across the counter of thebank. It
must be collected through a bank. Itis paid into the bank account
of a person andcannot be encashed at the counter of the bank.By
crossing cheques safety is ensured and theperson to whom
payment is eventually made canbe tracedbecause such a cheque
is always paidinto a bank account.A crossed cheque
providesprotection not only to the holder of the chequebut 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
It cannot be made payable to bearer.
Its payment cannotbe stopped.
It is drawn by a bank upon itself.
CHEQUE
It may be drawn payable to bearer.
It is countermandedas in case of a cheque.
A cheque is drawnby one person upon another.

DEBIT NOTE
It is a document evidencing that a debit to beraised against a
party for other reasons, fore.g., when goods are returned to a
supplier orwhen an additional amount is recoverable froma
customer.
CREDIT NOTE
It is made out when a party is to be given acredit except against
the bill already receivedfrom it. When goods are received back
froma customer, a proper credit note should begiven 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)Secific 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 there of; 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.
PECIAL CROSSINGSPECIAL 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.