DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : Dr. K.V.Subbarao

Designation : Head of Section
Branch : CCP
Institute : Govt. Poly.for Women, Palamaner
Year/Semester : III Semester
Subject : Office Organisation
Subject Code : CCP-304
Topic : Methods of making payments
Duration : 50 minutes
Sub Topic : Bank Cheques and draft
Teaching Aids : PowerPoint, Animation and Pictures

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Objectives
On completion of this period, you would
be able to:
 Critically compare various modes of payments
 Define negotiable instrument
 List the features of a Cheque
 Examine the various parts of a cheque

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Objectives (contd…)

 Explain the uses of a cheque

 List the features of a Bank Draft
 Examine the various parts of a Bank Draft
 Explain the uses of a draft

CCP304. 38 3
Recap

 Various methods of making payments

 Features of Money order
 Features of Postal Order
 How to use them

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What do you do when you want to make payment
and there is no Post Office nearby?

Ans: The other method of making payments is

through Banks

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Negotiable Instrument

“A Promissory Note, Bill of Exchange or Cheque

payable either to order or bearer whether the
words order or bearer appear in the instrument
or not” – Sec. 13 of Negotiable Instruments Act

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A Cheque

“A bill of exchange drawn on a specified banker

directing the banker to pay a certain sum of
amount to the payee or the order on demand.”

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Features of a Bank Cheque

 Instruction to the Banker

 An Un-conditional order
 Payable to a certain person
 A certain sum
 Signed by the maker

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Parts of a cheque

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Uses of a cheque
 It is a negotiable instrument
 Easy transferability
 Amount payable only on presentation of
cheque
 Safer way of transfer of funds
 Control over payment – stoppage of payment
 No charges for the sender
 No restriction on the amount of cheque

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Bank Draft

“It is a bill of exchange payable on demand or

otherwise in favour of a third party drawn by
one branch of a bank on another branch of the
same bank”

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Features of Bank Draft
 Instruction from Banker to another Banker
 Draft to be purchased by the individual
 Commission has to be paid.
 Funds transferred from one branch to another
branch
 No restriction on the amount
 No need to maintain an account with Bank

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Parts of a Bank Draft

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Uses of Bank Draft
 Easier transfer of funds
 No restriction on the amount
 Amount to be paid only to the bearer
 Security feature such as Crossing

CCP304. 38 14
Summary

 A cheque is a negotiable instrument.

 It is an instruction to the maker’s banker to pay
a certain sum to a certain person.
 An unconditional order
 Payable only on presentation
 Payable to the payee or his order

CCP304. 38 15
Summary (contd…)

 Draft is a bill of exchange

 Instruction of one banker to another banker
 Payable only to the person named
 Commission chargeable

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Quiz
1. A cheque is _____________.

a) Piece of paper
b) Bill of exchange
c) Negotiable Instrument
d) Instrument

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1. Which one of the following is not true

a) A cheque is paid without money in the bank

b) Commission is payable on cheque
c) It is an unconditional order
d) There are two bankers involved

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Frequently asked questions

1. Define a negotiable instrument.

2. List the features of a cheque.
3. List the uses of a cheque.
4. Mention the features of a draft.
5. List the uses of a draft.

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