What is a cheque? How does it replace currency?
A cheque is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been drawn.
- The facility of cheque against demand deposits makes it possible to directly settle the payments without the use of withdrawal.
- For payment through cheque, the payer who has an account with the bank, makes out a cheque of a specific amount.
- The money is transferred from one bank account to another in a couple of days. The transaction is complete without any payment of cash.