A check is a written that is dated, signed, and dated instrument that directs banks to make a particular amount of money to their bearer. The person who writes the check is referred to as the payor or drawer, while the person to who the check is issued is the payee. The drawee, on the other of the two, is the bank where the check is drawn.
Checks can be cashed or deposit. If the person who is paying presents the check to a bank or financial institution in order to discuss, the money will be taken out of the payer’s bank account. It’s a different method for the bank to be instructed to transfer funds from the account of the payer’s account to the account of the recipient or the payee’s account. Checks are typically written against a checking account but they can also utilized to transfer cash from savings accounts or other kind of account.
The Finance Ministry has declined the report of a checkbook ban to encourage digital transactions, declaring the government has no plans to eliminate it. Here’s the reason why Indian businesses love checkbooks.
India is currently experiencing a major digital revolution, and just a report of the government removing checks has triggered enough controversy. And, why? Businesses still love their checkbooks for transferring money. Yes, India is moving -slowly — towards a cash-free economy, but cheques have always been a source of value.
According to RBI information, in August it was reported that there were checks valued at more than 6,224.34 billion, three times greater than debit card transactions and close to 10 times more than the mobile transaction even though digital transactions increased dramatically after Demonetisation. Here’s why businesses continue to love checkbooks even as they are going digital:
Chargeless:
It’s digital transactions or any other form of traditional financial instrument There is a cost for each. Making a check is not expensive.
Traditional:
Cheques have been an integral component of India’s payment ecosystem. In the past, businesses have come to develop a sense trust and confidence in the writing of cheques. In addition, options such as securing the due date of payments can be secured with post-dated cheques.
Secure:
Digital transactions don’t come without the threat of Cyber dangers, value checks are secure because it is handed to a third party and the recipient receives the funds in his account. It is common for companies to go with a secure option particularly when a substantial amount is involved.
Convenient:
- In India, where a significant portion in the populace trying to adjust to the digital revolution, particularly in rural and small city regions, writing a check is much more comfortable than using a smartphone to enter the password and ensuring network strength, internet connection et al.
- While cheques are convenient, they have demerits too. While online transactions are swift while cheques take up to two days to clear. However, in the event that it’s safer, chargeless and convenient it is why businesses would switch to another method of payment absent a motive?
- Pinky Khanna Expert in Personal Tax for EY India, says, “Cybersecurity risks, security from fraudulent transactions and removing transaction fees from transactions made online are some of the most crucial steps that must be undertaken prior to the time when cheque books are removed from the market. …. Also, teaching the older generations and those living in smaller cities is crucial to ensure this is a successful process.”