Bank Cheque: There are several ways to transfer money from the bank nowadays, such as Internet Banking and UPI services.
However, checks have been a traditional method of money transactions for a long time. In some cases, the back of the check needs to be signed. Why is this necessary? Let’s delve into the details.
If you have a bearer check, it should be signed on the back. A bearer check allows anyone to withdraw money from the bank, even if it is not in their name.
This could lead to theft or other issues, so keeping the check is essential. Banks require the person depositing a bearer check to sign it on the back to prevent such problems.
If the recipient signs the back of the check, the bank will have a record of who received the money. This signature helps the bank verify the transaction’s legitimacy and holds the person who signed the check responsible.
What is a Bearer Cheque? A bearer check allows anyone who presents it to the bank to withdraw money, regardless of the name on the check.
Due to this flexibility, the bank takes extra precautions, such as requiring the signature of the person depositing the check to prevent fraud. In some cases, especially for large sums of money, the bank may also request proof of address from the check presenter to aid in tracking them in case of fraud.
What is an Order Cheque? A signature on the back of an order check is not required. With an order check, the bank only pays the person specified. The check also clearly states that it is an order check and not a bearer check.
The individual named on the check must be present at the bank to withdraw the money, so the person depositing the check does not need to sign the back, as their identity is known to the bank.
However, before paying out an order check, bank employees verify it and the person presenting it to ensure everything is in order.