What is a cheque?
An instrument used to settle the financial obligation with the individuals or with the creditors of a company. It is a trusted form of making payments as the intended recipient only will be able to encash it.
The cheques are basically a type of bills of exchange originally introduced to make the payments easier and safer without the need to carry the huge amounts of cash.
What are the details written on the cheque:
Name of the bank
Cheque drawn in favor of
Amount in figures and words
What is a stale cheque?
A cheque presented into the bank after a certain period of its payment date is a stale cheque. Ex: A cheque dated 1st Jan 18 is presented on 10th Aug 18, which is 6 months after the payment date.
Usually the cheque date validity is only for 6 months, if the cheque is presented into the bank after the time lapse, then it is termed as stale.
The bank will not honor the cheque unless the drawer reconfirms the payment by writing the revised date and acknowledging the same or by issuing another cheque against the stale one.
Hence it is very important to the cheque holder to encash the cheque prior the cheque expiry date. (i.e., within 6 months from the cheque date).