BANK PASSBOOK

Introduction:

• A bank passbook is a physical notebook held by bank account holders. It records on paper
the details of all banking transactions, including elements such as: Debits. Credits, Loans,
Fixed deposits, Recurring deposits etc.
• Bank passbooks offer beneficial tools for transactional operations and help us to keep
record on paper regarding the deposits and withdrawals.
• A bank passbook, also known as a savings passbook or bank book, is a physical record
provided by a bank to its customers. It serves as a record of all the transactions made on a
savings or current account held by the customer at that particular bank. The passbook is
typically a small booklet, and each page represents a different account holder.

Ø State Bank of India Bank Passbook Sample:

Ø Front page of bank passbook of Union Bank of India:

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● A bank passbook is a physical notebook held by bank account holders. It records on
paper the details of all banking transactions, including elements such as: Debits. Credits,
Loans, Fixed deposits, Recurring deposits etc.
● Bank passbooks offer beneficial tools for transactional operations and help us to keep
record on paper regarding the deposits and withdrawals.

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 WITHDRAWAL SLIP

Introduction:

A withdrawal slip is a form or document used by bank customers to request the withdrawal of
money from their bank accounts. It is typically a small piece of paper provided by the bank or
available at the bank's teller counter. When a customer wants to take money out of their
account, they must fill out a withdrawal slip with the necessary information and present it to
the bank teller or use it at an ATM (Automated Teller Machine) for self-service withdrawal.

It is a document used in banking that allows an account holder to request the withdrawal of
funds from their bank account. It is a physical or electronic form that provides specific
instructions to the bank regarding the amount of money to be withdrawn and the account from
which the funds should be taken. Withdrawal slips are typically used for in-person transactions
at a bank branch or ATM (Automated Teller Machine).

Content of Withdrawal Slip:

1. Account Information: The customer is required to provide their account number and, in
some cases, their name or other identifying details. This is essential to ensure that the
withdrawal is made from the correct account.

2. Date: The date on which the withdrawal is being made is filled in this section. It helps the
bank keep track of the timing of the transaction.

4. Withdrawal Amount: Here, the account holder specifies the amount of money they want
to withdraw from their account. The amount can be written in both words and figures to
minimize any potential errors.

5. Signature: The customer must sign the withdrawal slip to authorize the bank to process the
transaction. The signature is crucial for security purposes to confirm that the request is
legitimate.

6. Bank Stamp: In some cases, a bank representative may stamp the withdrawal slip upon
processing the transaction. This stamp includes the date, time, and possibly the name of the
bank branch.

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7. Additional Instructions: In some cases, there might be fields for additional information or
special instructions related to the withdrawal, such as the denominations of cash needed (if
withdrawing from a teller).

8. Account Holder's Address (optional): Some withdrawal slips may include a section for
the account holder's address. This is an optional field and may or may not be required by the
bank.

9. Transaction Type:

• Self/Account Holder: Indicates that the account holder is withdrawing money for their
own use.
• Third Party: If the withdrawal is being made on behalf of someone else, the third party's
details may need to be provided.

Proforma:

Ø Withdrawal Slip of State Bank of India

Journal Entry:

Cash A/c …………………..Dr.

To State Bank Of India A/c

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Ø Withdrawal Slip of Bank of Maharashtra

Journal Entry:

Cash A/c …………………..Dr. 20,000

To Bank Of Maharashtra A/c 20,000

Additional Information:

Ø Once the customer fills out the withdrawal slip with the necessary information, they can
proceed to submit it to the bank teller for manual processing or use it at an ATM for self-
service withdrawal. In the case of ATM usage, the customer will usually need to insert the
withdrawal slip into the machine, follow the on-screen instructions, and the cash will be
dispensed based on the specified amount.

Ø It's important for customers to keep their withdrawal slips safe and not share them with
anyone else to prevent unauthorized withdrawals from their accounts. Additionally, many
modern banks also offer online and mobile banking services, which allow customers to
perform withdrawals electronically without the need for a physical withdrawal slip.

Ø Once the withdrawal slip is completed and signed, the account holder submits it to a teller
at the bank branch or uses it at an ATM (Automated Teller Machine) to initiate the withdrawal
process. The bank then processes the request, deducts the specified amount from the account
balance, and provides the account holder with the cash (if done in person) or completes the
transaction accordingly.

Ø It's essential for account holders to keep their withdrawal slips secure and ensure the
accuracy of the information provided to avoid any issues or delays in processing the
withdrawal request.

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 DEPOSIT SLIP

Introduction:

A deposit slip is a form used by bank customers to deposit money into their bank accounts. It
serves as a record of the transaction and provides essential information required for the bank
to process the deposit accurately. The deposit slip is typically provided by the bank and can be
obtained from bank branches or online banking platforms.

Deposit slips serve several important purposes when it comes to banking and financial
transactions. While their usage has decreased with the rise of digital banking and automated
processes, they are still relevant in specific scenarios. Here are some common uses of deposit
slips:

1. In-Person Bank Deposit: When visiting a bank branch in person to make a deposit,
especially for cash and checks, a deposit slip is typically used. It helps ensure accurate
recording of the funds being deposited and provides documentation for both the depositor and
the bank.

2. Check Deposit: Deposit slips are commonly used for depositing checks into a bank account.
They allow you to list the check details, such as the check number, issuing bank, and amount,
making it easier for the bank to process the deposit accurately.

3. Cash Deposit: For cash deposits, a deposit slip is used to specify the amount of cash being
deposited. This helps prevent errors and ensures that the correct amount is credited to the
account.

4. Multiple Account Deposit: If you have multiple accounts (such as savings and checking)
at the same bank, you can use a single deposit slip to allocate the deposited funds to different
accounts.

5. Special Instructions: Deposit slips can be used to communicate special instructions to the
bank, such as splitting the deposit between accounts, requesting a receipt, or indicating the
purpose of the deposit.

6. Documentation: Deposit slips provide a paper trail for your deposits, which can be useful
for record-keeping, budgeting, and tracking your financial transactions.

7. Proof of Transaction: In case of any discrepancies or disputes, a deposit slip serves as

proof that you made a deposit on a specific date and for a specific amount.

8. Bank Processing: Deposit slips help banks efficiently process deposits by providing the
necessary information to credit the correct account.

9. Non-Account Holders: In some cases, individuals who do not have an account at a specific
bank may be allowed to deposit funds into an account using a deposit slip, provided they have
the necessary documentation and identification.

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It's important to note that while deposit slips are still used for certain transactions, many routine
deposits, especially at ATMs, can be done without a deposit slip. Additionally, digital banking
allows for electronic check deposits and fund transfers without the need for physical forms.

Content of Deposit Slip:

1. Account Information: This section requires the account holder to provide details about
their bank account. It includes the account holder's name, account number, and sometimes the
type of account (e.g., savings, checking, etc.). This information helps the bank identify the
destination account for the deposit.

2. Date: The date on which the deposit is being made is filled in this section. It helps the bank
keep track of the timing of the transaction.

3. Deposit Amount: Here, the account holder specifies the amount of money they want to
deposit into their account. The amount can be written in both words and figures to minimize
any potential errors.

4. Breakdown of Currency: If the deposit contains multiple denominations of currency (e.g.,

different bills and coins), the account holder may need to provide a breakdown of the amount
for each denomination.

5. Signature: This is a crucial part of the deposit slip. The account holder needs to sign the
slip to authorize the deposit. The bank verifies this signature to ensure the transaction is
legitimate.

6. Account Holder's Address (optional): Some deposit slips may include a section for the
account holder's address. This is an optional field and may or may not be required by the bank.

7. Source of Funds (optional): In some cases, the account holder may be asked to provide a
brief description of the source of funds being deposited. This information is usually not
mandatory and depends on the bank's policy.

Proforma:

Ø Deposit Slip of ICICI Bank:

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Journal Entry:

ICICI Bank A/c ………………..Dr.

To Cash A/c

Ø Deposit Slip of Bank of Maharashtra:

Journal Entry:

Bank of Maharashtra A/c ……………..Dr.

To Cash A/c

Ø Deposit Slip of State Bank of India:

Journal Entry:

State Bank Of India A/c …………Dr. 50,000

To Cash A/c 50,000

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Additional Information:

Ø Once the deposit slip is completed and signed, the account holder hands it over to a teller at

the bank branch, or in some cases, they can use it at an ATM (Automated Teller Machine) that

accepts deposits. The bank then processes the deposit, credits the specified amount to the

account holder's balance, and provides a receipt as proof of the transaction.

Just like with withdrawal slips, it's crucial for account holders to keep their deposit slips secure

and ensure the accuracy of the information provided to avoid any issues or delays in processing

the deposit. Additionally, keeping the deposit slip and the receipt as proof of the deposit is

essential for record-keeping and account reconciliation purposes.

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 FD – FIXED DEPOSIT

Introduction:

A Fixed Deposit (FD) is a popular financial instrument offered by banks and financial
institutions to individuals and businesses. It is a type of term deposit that allows you to invest
a specific amount of money for a fixed period at a predetermined interest rate. The interest rate
on fixed deposits is generally higher than that of regular savings accounts, making it an
attractive option for those looking for low-risk investment options.

Ø A fixed deposit (FD) is a financial instrument offered by banks and financial institutions.

Definition: A fixed deposit is a type of investment where you deposit a lump sum amount with
a bank or financial institution for a fixed tenure at a predetermined interest rate.

Working of Fixed Deposit:

1. Deposit Amount: To open an FD, you deposit a lump sum of money with a bank or financial
institution. The minimum deposit amount varies from bank to bank and can be as low as a few
hundred dollars.

2. Tenure: You need to choose a specific tenure for your FD, which can range from a few
months to several years. The term you choose will determine the duration for which your
money will be locked in the FD.

3. Interest Rate: The bank offers a fixed interest rate on your FD, and this rate remains
constant throughout the tenure. The interest rate is generally higher than what you would get
in a regular savings account, making it an attractive option for conservative investors seeking
stable returns.

4. Interest Payout: The interest earned on the FD can be paid out at regular intervals (monthly,
quarterly, semi-annually, or annually) or reinvested into the FD (compounded). The choice of
interest payout depends on your preference and financial goals.

5. Premature Withdrawal: While an FD is a fixed-term investment, many banks allow

premature withdrawal in case of emergencies. However, this may come with a penalty, and the
interest rate payable might be lower than the originally promised rate.

6. Tax Implications: The interest earned from an FD is taxable as per the prevailing tax laws
in your country. Some countries offer tax-saving FDs, where the interest earned up to a certain
limit is tax-exempt.

7. Safety: Fixed deposits are considered safe investments since they are typically insured up
to a certain limit by Deposit Insurance and Credit Guarantee Corporation (DICGC) in India.

8. Investment Amount: The minimum investment amount required to open a fixed deposit
account varies from bank to bank. It can be as low as a few thousand rupees.

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9. Renewal: After maturity, you can choose to renew the fixed deposit, withdraw the amount,
or transfer it to another account as per your preference.

Benefits of Fixed Deposit:

Proforma: Fixed Deposit Receipt of State Bank of India:

Journal Entry:

Fixed Deposit A/c ……………………Dr.

To Cash A/c

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Additional information:

It's essential to consider the interest rates, tenure, and other terms offered by different banks
before choosing a fixed deposit to ensure it aligns with your financial goals and needs. Always
consult with a financial advisor for personalized advice based on your specific situation.

A deposit slip is a written or printed form provided by a bank that allows account holders to
deposit funds into their bank accounts. It serves as a record of the funds being deposited and
provides the bank with the necessary information to accurately credit the account. Deposit slips
are typically used for in-person transactions at a bank branch or at an ATM (Automated Teller
Machine) that accepts deposit slips.

The key information typically included on a deposit slip includes:

1. Account Holder Information:

This includes the account holder's name, account number, and contact information.

2. Date:

The date on which the deposit is being made.

3. Cash and Check Details:

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The deposit slip provides spaces to list the amounts of cash and checks being deposited. For
each check, you would include the check number, the amount, and sometimes the name of the
issuing bank.

4. Subtotal and Total:

The deposit slip usually has spaces to calculate the subtotal and total deposit amount.

5. Bank's Account Information:

The bank's account number and name, often pre-printed on the slip for identification purposes.

6. Special Instructions:

If you have specific instructions for the deposit, such as splitting the deposit into different
accounts or requesting a receipt, you can indicate this on the deposit slip.

7. Bank Stamp and Confirmation:

After processing the deposit, the bank typically stamps the deposit slip with relevant details,
including the date, branch name, teller's initials, and a confirmation of the transaction.

It's important to note that with the increasing use of digital banking and electronic transactions,
the use of physical deposit slips has diminished, especially for ATM deposits. Many ATMs
allow customers to directly deposit checks and cash without the need for a paper slip. However,
deposit slips may still be required for certain in-person transactions at bank branches,
particularly when dealing with large deposit amounts or specific account-related requests.

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 FIXED DEPOSITS

A Fixed Deposit (FD), also known as a Term Deposit or Time Deposit, is a financial instrument
offered by banks and financial institutions that allows individuals to invest a specific sum of
money for a predetermined period at a fixed interest rate. Fixed deposits are considered one of
the safest investment options as they provide guaranteed returns and principal protection.

Here's how a Fixed Deposit typically works:

1. Investment Period: When opening a Fixed Deposit, you choose a specific period for which
you want to invest your money. This period can range from a few months to several years.
The investment period is fixed and cannot be changed once the deposit is made.

2. Principal Amount: You deposit a certain amount of money, known as the principal, into
the Fixed Deposit account. This principal amount remains locked for the duration of the
deposit.

3. Interest Rate: The bank offers you a fixed interest rate for the entire duration of the deposit.
This interest rate is agreed upon at the time of opening the Fixed Deposit and remains
constant throughout the investment period.

4. Interest Payment: The interest earned on the Fixed Deposit is typically paid out at regular
intervals, which could be monthly, quarterly, annually, or at maturity. You can choose the
frequency of interest payments based on your preference.

5. Maturity: At the end of the investment period (maturity), the principal amount along with
the accrued interest is returned to you. You can choose to reinvest the entire amount,
withdraw it, or opt for a combination of both.

Key features and benefits of Fixed Deposits:

1. Safety and Stability: Fixed deposits are considered a low-risk investment as they are backed
by the bank's reputation and deposit insurance coverage (up to a certain limit). The interest
rates are predetermined, providing stability in returns.

2. Guaranteed Returns: The interest rates offered on Fixed Deposits are fixed at the time of
investment, ensuring a predictable and guaranteed return on your investment.

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3. Liquidity: While your money is locked for the agreed-upon period, most banks offer the
option of premature withdrawal, albeit with a penalty and a potentially reduced interest rate.

4. Regular Income: Fixed Deposits can provide a source of regular income if you choose to
receive interest payments at regular intervals.

5. Diversification: Fixed Deposits can be a part of a diversified investment portfolio, providing

stability and income alongside other investment options.

6. Tax Implications: The interest earned on Fixed Deposits is generally subject to income tax.
The tax treatment varies based on the tax laws of your country.

7. Choice of Tenure: FDs offer flexibility in choosing the investment tenure. Investors can
select a period that aligns with their financial goals, ranging from a few months to several
years.

8. Nomination Facility: Investors can nominate a beneficiary who will receive the maturity
amount in case of the investor's unfortunate demise.

9. Interest Payment Frequency: Investors can choose to receive interest payouts at different
frequencies, such as monthly, quarterly, annually, or at maturity, based on their cash flow
needs.

10. Compound Interest: Many FDs offer compound interest, where interest is calculated not
only on the initial principal but also on the accumulated interest. This can lead to higher returns
over time.

11. Wide Range of Investors: Fixed Deposits are accessible to a wide range of investors, from
individuals to senior citizens, HUFs (Hindu Undivided Families), and even non-resident
individuals.

12. Ease of Investment: Opening an FD is a straightforward process that typically requires

minimal documentation. Many banks also offer the convenience of opening FDs online.

13. Loan Against FD: In certain cases, investors can avail of loans against their FDs. This can
be useful in times of financial need without having to break the FD prematurely.

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14. No Market Fluctuations: Unlike investments in stocks or mutual funds, FDs are not
subject to market fluctuations, making them a stable option for risk-averse investors.

It's important to note that the interest earned on Fixed Deposits may be subject to income tax,
and the tax treatment may vary based on the tax laws of your country. Additionally, the actual
features and terms of FDs may differ between banks and financial institutions, so it's advisable
to review the specific terms and conditions before making an investment.

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 RD – RECURRING DEPOSIT

Introduction:

A recurring deposit (RD) is a type of financial instrument offered by banks and financial
institutions that allows individuals to save money in a systematic and disciplined manner over
a fixed period. It is a popular savings option for individuals who want to build a corpus for a
specific financial goal or for those who have a regular income and wish to save a fixed amount
every month.

Working of Recurring Deposit:

• Deposit Amount: When you open an RD account, you need to decide on the amount
you want to deposit every month. This amount remains fixed for the entire tenure of the
RD.
• Tenure: The RD has a specific tenure or duration, typically ranging from 6 months to
10 years. You cannot withdraw the money before the tenure ends, unless in certain
exceptional circumstances, and if you do, there might be penalties or reduced interest
rates.
• Interest Rate: The bank or financial institution offers a fixed interest rate for RDs. The
interest rates for RDs are usually lower than Fixed Deposits (FDs) since the bank enjoys
the benefit of having access to your funds over time.
• Monthly Contributions: Every month, on a fixed date, you need to deposit the pre-
decided amount into your RD account. This amount is deducted from your savings or
current account and transferred to the RD account.
• Compounding: The interest on RDs can be compounded either quarterly or monthly,
depending on the bank's policy. Compounding means that the interest earned in
previous periods is added to the principal amount, and future interest is calculated based
on this updated amount.
• Maturity Amount: As you keep making regular contributions, your RD balance
increases with the monthly deposits and the compounded interest. At the end of the
tenure, the total amount accumulated (principal + interest) is known as the maturity
amount.
• Regular Deposits: As the name suggests, you need to make regular deposits into your
RD account on a fixed date each month until the tenure ends.

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 • Missed Deposits: If you miss depositing the required amount on the due date, the bank
may charge a penalty, and your RD account may be deactivated if you fail to deposit
the minimum number of times specified by the bank.
• Premature Closure: RD accounts usually come with restrictions on premature closure.
If you close the account before the tenure ends, you may receive a reduced interest rate
or no interest at all.

Proforma:

Ø Recurring Deposit receipt of UCO Bank:

Journal Entry:

Recurring Deposit A/c ………………..Dr.

To Cash A/c

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Additional Information:

Ø RDs are a conservative and disciplined way to save money over time, particularly for those

who may not have a lump sum amount to invest in one go. It's suitable for meeting short-term

goals and building an emergency fund.

Ø Before opening an RD account, it's essential to compare interest rates offered by different

banks, check their policies on missed deposits and premature withdrawal, and choose a tenure

that aligns with your financial goals and needs.

Ø Overall, recurring deposits are a straightforward and convenient savings option for

individuals looking to accumulate funds gradually over time while earning a fixed interest on

their savings. However, before investing in an RD, it is essential to compare the interest rates

offered by different banks and understand the terms and conditions associated with the account.

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 LOAN DOCUMENTS

Introduction:

Ø Loan documents are essential paperwork that establish the terms and conditions of a loan

agreement between a lender and a borrower. The specific documents required can vary

depending on the type of loan and the lending institution, but some common loan documents

include:

• Loan Application: The initial form where the borrower provides personal and financial

information to apply for the loan.

• Promissory Note: A legally binding agreement that outlines the terms of the loan,

including the loan amount, interest rate, repayment schedule, and any penalties for non-

payment.

• Loan Agreement: This document details the specific terms and conditions of the loan,

such as the purpose of the loan, collateral (if applicable), and other important provisions.

• Disclosure Statements: These provide information about the loan, including the Annual

Percentage Rate (APR), total repayment amount, fees, and any other relevant costs.

• Security Agreement: If the loan requires collateral (e.g., a car or property), this

agreement outlines he terms related to the collateral.

• Proof of Income: The lender may request documents to verify the borrower's income and

ability to repay the loan, such as pay stubs, tax returns, or bank statements.

• Identification and Address Verification: The borrower may need to provide

identification documents, such as a driver's license or passport, to verify their identity and

address.

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• Other Supporting Documents: Depending on the loan type and specific requirements,

additional documents like business plans, financial statements, or property appraisals may

be necessary.

Structure of Loan Document:

1. Title: The document should have a clear and descriptive title, such as "Loan Agreement" or
"Promissory Note."

2. Parties: Identify the parties involved in the loan transaction, including the lender (also
known as the creditor) and the borrower (also known as the debtor). Include their full legal
names and addresses.

3. Loan Amount and Purpose: Clearly state the principal loan amount and the purpose of the
loan.

4. Interest Rate: Specify the interest rate at which the loan will accrue. If it's a fixed-rate loan,
state the exact interest rate. If it's a variable-rate loan, outline how the rate will be determined.

5. Repayment Terms: Define the repayment terms, including the schedule of payments (e.g.,
monthly, quarterly) and the due dates.

6. Late Payment and Default: Explain the consequences of late payments or defaulting on
the loan, such as additional fees, penalties, or possible legal actions.

7. Security/Collateral (if applicable): If the loan is secured by collateral (e.g., real estate,
vehicles), describe the collateral and its value.

8. Prepayment: Outline whether or not the borrower can make early payments without penalty
and any terms related to prepayment.

9. Governing Law: Specify the jurisdiction and the laws that govern the loan agreement.

10. Signatures: Provide spaces for both parties to sign and date the document. If there are
witnesses or notaries required, include spaces for their signatures as well.

11. Amendments and Waivers: Include a clause that outlines how the agreement can be
amended or modified and how waivers will be handled.

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12. Severability: Include a clause stating that if any part of the agreement is deemed invalid,
the rest of the document will still be enforceable.

Proforma:

Ø Personal Loan Agreement:

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Ø Official Loan Agreement:

Additional Information:
Ø Please note that loan documents can be legally binding contracts, so it's crucial to
Ø Ensure accuracy and completeness. It's always a good idea to seek legal advice or consult
with a financial professional when creating or signing loan documents to protect your interests.
Ø It's crucial to carefully read and understand all the loan documents before signing, and if you
have any questions or concerns, don't hesitate to ask the lender for clarification.
Ø Please keep in mind that the specific loan documents you need may differ based on your
location and the lending institution. If you are in the process of applying for a loan, it's best to
consult with the lender directly to understand their specific requirements and obtain the
appropriate documents.
A loan document is a legally binding agreement that outlines the terms and conditions of a
loan, including the amount borrowed, interest rate, repayment schedule, and any collateral
required. Its purpose is to establish a clear understanding between the lender and borrower.
The document's significance lies in protecting both parties' rights and responsibilities, ensuring
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compliance with laws, and providing a reference in case of disputes. The content typically
includes loan details, repayment terms, interest calculations, borrower and lender information,
and legal clauses.
• KYC Documents: Proof of Identity; Address proof; DOB proof.
• Proof of Residence: Leave and License Agreement / Utility Bill (not more than 3
months old) / Passport (any one).
• Income proof (audited financials for the last two years). Latest 6 months Bank
statement.
• General loan document checklist that might be useful:
• Personal Identification:
• Government-issued photo ID (e.g., Driver's license, Passport)
• Adhar UIN (or equivalent)
• Proof of Income:
• Payment proof or E-Proof
• Tax returns (typically for the last two years)
• Proof of additional income (e.g., rental property, investments)
• Credit History:
• Credit report
• Recent credit card statements
• Loan statements
• Assets:
o Bank statements (checking, savings, investment)
o Property documents (real estate, vehicles)
o Proof of down payment
• Liabilities:
o Outstanding loan statements (auto, student, mortgage)
o Credit card balances
• Employment and Residence Verification:
• Proof of current address (utility bills, rental agreement)
• Contact information for current employer and previous employers
• Collateral Documentation (if applicable):
• Details about the property being used as collateral
• Appraisal reports
• Additional Documents:
• Personal financial statement
• Explanation of any unusual or large deposits or withdrawals

Remember that the specific documents required can vary depending on the type of loan you're
applying for and the lender's requirements. It's always best to check with your lender to ensure
you have all the necessary documents for your specific loan application.

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 CHEQUE BOOK

Introduction:
A cheque book is a small, bound booklet containing a set of blank cheques issued by a bank to
its account holders. Each cheque in the book represents a written order from the account holder
to the bank, instructing the bank to pay a specified amount of money to a designated recipient
or "payee."

Here's how a typical cheque book works:

1. Account Holder Information:

The cheque book contains the account holder's name, address, and bank account number. It
may also have the bank's name, logo, and contact information printed on each cheque.

2. Cheque Leaves:

The cheque book consists of multiple "cheque leaves," which are individual pages that can be
torn out when a cheque is issued.

3. Cheque Details:
Each cheque leaf contains several important fields that need to be filled out:

• Date: The date on which the cheque is issued.

• Payee: The name of the person or entity who will receive the payment.
• Amount: The numeric and written amount of money to be paid.
• Signature Line: The account holder must sign the cheque to authorize the payment.

4. MICR Code:

A magnetic ink character recognition code at the bottom of the cheque used for processing.

5. Writing a Cheque:

To issue a cheque, the account holder fills in the required details on the cheque leaf, including
the date, payee's name, and amount. The account holder then signs the cheque to confirm its
authenticity and authority to withdraw funds from their account.

6. Using the Cheque Book:

The cheque book is primarily used for making payments or transferring money to others. The
recipient can deposit the cheque into their bank account, and the money is withdrawn from the
issuer's account once the cheque is processed.

7. Safety and Security:

Cheque books need to be handled with care to avoid misuse. Account holders should keep their
cheque books in a secure place to prevent unauthorized access. In case of loss or theft, the
account holder should notify the bank immediately to prevent fraudulent transactions.

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Proforma:

Sample of HEXAGON Bank Cheque Book:

§ Cheques are a widely used form of negotiable instrument used for making payments.
They come in various types, each serving different purposes.

§ Here are some common types of cheques:

a) Bearer Cheque: A bearer cheque is payable to the person who presents the cheque to
the bank. It does not require the endorsement of the payee's name on the back of the
cheque, making it more susceptible to misuse. Therefore, it is essential to handle bearer
cheques with caution.

Journal Entry:

Mihir Bajaj A/c ……………. Dr. 10,000

To State Bank of India A/c 10,000

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 b) Order Cheque: An order cheque is payable to a specific person or organization named
on the cheque. It requires the payee to endorse the back of the cheque to cash or deposit
it. Order cheques are more secure than bearer cheques as they are not payable to just
anyone.

Journal Entry:

Sabyasachi Mukherjee A/c ……….. Dr. 57,000

To HDFC A/c 57,000

c) Crossed Cheque: A crossed cheque has two parallel lines drawn across its face. This
crossing indicates that the cheque can only be deposited into the payee's bank account
and cannot be cashed over the counter. It adds an extra layer of security to the
transaction.

Journal Entry:

Ankit Sharma A/c ……….. Dr. 37,000

To HDFC A/c

d) Post-dated Cheque (PDC):

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A post-dated cheque has a future date written on it. The cheque becomes valid and can be
processed only on or after that specified date. This type of cheque is commonly used for future-
dated payment.

Journal Entry:

Ankit Sharma A/c ……….. Dr. 37,000

To HDFC A/c

e) Self Cheque: A self-cheque is written and drawn by an account holder on their own
account. The account holder can cash it or deposit it into another account.

Journal Entry:

Cash A/c ……. Dr. 5,000

To Axis Bank A/c 5,000

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 f) Canceled Check : A cancelled cheque refers to a cheque that contains two parallel
lines drawn across the layout. It is also necessary to write the term ‘cancelled’ between
these lines. You need not make a signature on the cancelled cheque.

Journal Entry:

No Journal Entry

Information about cheque book:

• Purpose: Cheque books are used as a convenient and secure way to make payments
or transfer funds from one bank account to another.
• Components: Each cheque book contains several cheques, usually 25 or 50, with a
unique cheque number on each. The book may also include counterfoils to keep track
of issued cheques.
• Personalization: Cheque books are personalized with the account holder's name,
address, and the bank's details. The account number and bank's routing information
are also included.
• Security: Cheques have security features, such as watermarks, holograms, or
microprinting, to prevent fraud and unauthorized usage.
• Writing a cheque: To use a cheque, the account holder fills in the recipient's name,
the payment amount in both words and figures, the date, and signs the cheque. The
recipient can then deposit or cash the cheque.
• Clearing process: When a cheque is deposited, it goes through the clearing process,
where the funds are transferred from the issuer's account to the recipient's account.
• Usage: While cheque usage has declined with the rise of digital payment methods,
they are still commonly used for various transactions, especially in certain business
environments.

Additional Information:

Ø While cheque books were commonly used in the past, with the advent of digital payment
methods, their usage has decreased significantly. Electronic fund transfers, online banking, and
mobile payment apps have become more prevalent due to their convenience and speed.
However, some individuals and businesses still use cheque books for specific transactions or
as an alternative payment method.

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 NEFT / RTGS

Introduction:
• NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement)
are electronic funds transfer systems used in India for interbank money transfers.
• NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT). NEFT is an electronic
payment system developed by RBI to facilitate transfer of funds by customers from one
bank to another bank in India. It is a secured, economical, reliable and efficient system
of funds transfer between banks.

Proforma:

Ø SBI RTGS/NEFT FORM:

Journal Entry:
Party A/c ………. Dr.
To State Bank of India A/c

NEFT:

• NEFT is a payment system that facilitates one-to-one fund transfers from one bank
account to another.
• It operates on a deferred net settlement basis, where transactions are processed in
batches at specific intervals during the day.

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 • There is no minimum or maximum limit for NEFT transactions, but some banks may
impose their own limits.
• NEFT transactions are not processed on bank holidays and weekends.
• The beneficiary's bank typically credits the funds to the recipient's account on the same
day if the transaction is initiated before the batch processing cut-off time.

Ø State Bank of India NEFT Form:

Journal Entry:

S. Sunil A/c ……… Dr. 13,993.75

To State Bank of India A/c 13,993.75

RTGS:

RTGS stands for Real-time Gross Settlement, meaning that through this method, the money is
transferred from one bank account to the other in real-time, without any delay. RTGS works
out as the best payment method if you need to transfer an amount equal to or more than Rs. 2
lakh in real time.

• RTGS is a real-time interbank fund transfer system used for large-value transactions.
• It operates on a gross settlement basis, meaning each transaction is settled individually
and instantly in real-time.
• RTGS is primarily used for high-value transactions with a minimum threshold, typically
set by the central bank.
• The RTGS service is available during the working hours of the respective bank branches,
and the processing is not available on bank holidays.

P a g e 32 | 34
• Both NEFT and RTGS are secure and reliable methods of transferring funds
electronically between banks in India. The fees for NEFT and RTGS transactions may
vary depending on the bank and the amount being transferred.

Ø Bank of Baroda RTGS Form:

Journal Entry:

Party A/c …………. Dr. xxx

To Bank of Baroda A/c xxx

Difference between NEFT and RTGS:

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NEFT has no minimum or maximum limit on the amount to be transferred, RTGS transactions
can only be performed if the amount to be transferred is equal to or more than Rs. 2 lakh.
Similarly, NEFT transactions take around 2 hours to be processed, while RTGS transactions
are processed immediately.

Point of Difference NEFT RTGS

Minimum Amount to be
Re. 1 Rs. 2 Lakh
Transferred

Maximum Amount to be
No limit No limit
Transferred

Amount settled in Amount settled one-on-

Type of Settlement
batches one

Settlement Time 2 hours Immediate

Varies from bank to

Transfer Timings 24*7, all 365 days
bank

Both- online and

Mode of Transfer Both- online and offline
offline

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