Checks are written in a signed, dated, and date instrument that tells a bank to make a particular amount of money to the person who issued it. The person who writes the check is referred to as the payor or drawer, while the person who the check is written is known as the payee. The drawee, on the other on the other hand, is the institution on which the check is drawn.
The sports checks can be cashed, or put into. When a payee brings checks to a banking institution or any other financial institution to make a deal, the funds are drawn from the payor’s bank account. It’s a different method to instruct the bank to transfer funds from the payor’s account to the payee or the account of the payer. The majority of checks are written against checking accounts, but they can also used to obtain cash from savings accounts or any other type of account.
The Finance Ministry has declined the idea of a ban on check books for pushing digital transactions, saying it has no plans to scrap it. Here’s why Indian businesses love their check books.
India is undergoing a massive digital revolution, and just a news report about the government pulling checkbooks has caused a lot of controversy.
- And, why? Because businesses still love their chequebooks to transfer money. Sure, India is moving — slowly — towards an economy that is cash-free, but cheques continue to hold significance.
According to RBI information, in August, there were cheque transactions valued at the sum of 6,224.34 billion, which is three times as much as debit card transactions and nearly 10 times more than the mobile transaction, even though digital transactions have increased during the post-Demonetisation period. Here’s why companies still like chequebooks, even when they’re becoming digital:
Chargeless:
No matter if it’s digital or traditional transactions or other types of traditional financial instrument that are charged, there is an expense involved. Making a check is not expensive.
Traditional:
Cheques have long been an integral element of India’s payment landscape. Through the years, businesses have developed a sense of trust and confidence in writing cheques. Furthermore, options for securing future payments are possible with post-dated checks.
Secure:
Digital transactions do not come without Cyber security risks. Cheques are safer since it is handed to a third party and then the person who received the funds within his accounts. It is natural for businesses to pick a method that is safer particularly when a substantial amount is involved.
Convenient:
In India where the majority part of people still struggling to adapt to the digital revolution, especially in rural and small-sized cities areas, using a cheque is much more efficient than using a mobile, entering the password, and making sure the network is strong, internet connection et al.
- While cheques are convenient, they have negatives as well. While online transactions are quick however, cheques can take up to 2-5 days to clear. However, in the event that it’s safer and free of charge, why businesses would shift to a different mode of payment without some incentive?
- Pinky Khanna is the expert in Personal Tax with EY India, says, “Cybersecurity threats, security against fraudulent transactions and removing transaction fees of digital transactions are a few of the main steps to take before the cheque book can be taken out of circulation. …. Additionally, educating the older generation and people living in cities that are smaller is essential to make this an effective process.”