Cheques


What is a cheque?

A cheque is a paper instrument that orders a payment of money from a bank account.
A current account holder can write cheques to order payments of money. Cheques are provided when customers open a current account.

What happens when you deposit a cheque?

When you deposit a cheque you have received into your account, your bank will send the image of the cheque to the payer’s bank to collect the amount on the cheque for crediting into your account. This process of one bank collecting funds from another bank is called cheque clearing and requires time.

Cheques are cleared Mondays to Fridays only. On Saturdays, Sundays and public holidays, there is no crediting or debiting of customer accounts with cheques, GIRO or interbank funds transfers.

The table below shows when the account would be credited or debited and when funds would be made available for Singapore dollar cheques. For more details, please call your bank.   

Cheque deposited on Account credited / debited on Funds available 
Monday to Thursday (before cut-off time*) The same day the cheque is deposited The following day (after 2pm)
Thursday (after cut-off time*) Friday Monday (after 2pm)
Friday (before cut-off time*) Friday Monday (after 2pm)
Friday (after cut-off time*) Monday Tuesday(after 2pm)

*For most banks, the cheque deposit cut-off time is 3.30 pm on Mondays to Fridays.

Cheques are accepted on Saturdays and Sundays at banks that offer branch banking facilities on these two days or at Quick Cheque Deposit Boxes. However, the cheques will not be cleared until Monday. On Saturdays, cash cheques can be en-cashed at the payer’s bank. Cheques for deposit into an account may be marked and drawn on, provided both the payee and the payer are from the same bank. A handling fee will be charged for this.

Deposit cheques promptly to avoid the risk of loss and theft. Unless otherwise stated, cheques are generally valid for six months from the date on the cheque.

What must you do when writing a cheque?

Ensure you have sufficient funds in your account 

If you have insufficient funds in your account, your cheque may not be honoured (it may be rejected) when it is presented for payment and you will incur these charges:

  • Handling / administrative fee for return of cheque, and
  • Overdraft (OD) interest charge to cover bank’s loss in overnight interest. 
Cross your cheque where appropriate

If you do not want your cheque to be encashed or if you want your cheque to be non-transferable, you should:

  • Cross the cheque by drawing two parallel lines across the top left-hand corner of the cheque;
  • Cancel “or bearer” on the cheque; and add “Account Payee Only” (or “A/C Payee Only”) if the payment is meant only for the person written on the cheque.

A crossed cheque is cleared through the bank account of the payee.

If the cheque is crossed with only two parallel lines across the top-left-hand corner of the cheque (general crossing) and without cancelling “or bearer”, it can be deposited into any party’s bank account.

If you want the cheque encashed by the holder,

  • Do not cross your cheque;
  • Do not delete the words “or bearer” on the cheque;
  • Do not add the words “Account Payee Only” (or “A/C Payee Only”).
Write payee’s name clearly

Write or print the name of the person or entity you are paying clearly and legibly. Cross out any extra space on the line after the name, by drawing a line, to avoid unauthorised alterations later. Use dark permanent ink, like ball point, and not ink that can be washed or erased away.

Write amount payable clearly

Write the amount in words and write “only” after the amount in words. Cross out any extra space to avoid unauthorised alterations later by drawing a line across the extra space.

In the box, put in the amount in figures. Cross out any extra space with a line.

The amount in words and amount in figures should be the same. If not, the cheque may be returned and charges may be imposed.

The decimal point must be clearly seen. Do not use the backslash symbol (“/”) in place of the decimal point as it can be misread as the digit one (“1”). For clarity, use the comma when dealing with large numbers with four or more digits, e.g. $10,000.

Check all details before signing

Check all details before you sign a cheque. Never pre-sign cheques. Avoid using signatures that are simple with few strokes, as these are easily forged.

If you alter your cheque, do sign in full against the alteration. If there is more than one alteration, it is better to issue a new cheque to avoid confusion.

Avoid writing post-dated cheques

Post-dated cheques cannot be cleared immediately when the payee receives them. There may also be processing charges when the cheques are returned.

What if you want to stop payment?

If you want to stop payment on any cheque or the entire cheque book (in the event of theft), notify your bank immediately. You can only stop payment of an issued cheque if the cheque has not been cleared or encashed. An administrative fee may be charged by the bank.

What if a cheque is returned unpaid?

If you are a Payee...

When a cheque that you have deposited into your account is returned unpaid, you will receive an image return document (IRD) instead of the physical cheque. The IRD serves as a notice of dishonour and replaces the original cheque for purpose of re-presentment for clearing.

The bottom half of the IRD will set out why the cheque was unpaid as well as whether you can present the IRD again for clearing.

If you can present the IRD to the bank for clearing, you should detach the IRD from the Return Cheque Advice and deposit it at a branch of the same bank that you first deposited the cheque. You may also use the bank's Quick Cheque Deposit box.

If you cannot present the IRD to the bank for clearing, you should return the IRD to the payer and ask for a new cheque.

If you are a Payer...

If you have insufficient funds in your account, your cheque may not be honoured when it is presented for payment and you will incur a handling or administrative fee for the return of cheque, and also overdraft (OD) interest charges to cover the bank’s loss in overnight interest.

The OD interest charge arises when a cheque is drawn on an account which has insufficient funds. When a cheque is sent for clearing, the payer’s bank pays the proceeds of the cheque to the payee’s bank and the account of the payer will be debited on the same day. If the payer’s bank account has insufficient funds, the bank will reverse the entry (i.e. credit back to the payer's account) on the next business day. The payer's account will show an OD entry, and an overnight OD interest charge will be imposed on the overdrawn balance in the payer’s account.
For example, if the payer issues a cheque for $1,200 when he has only $1,000 in his account, he will be charged overnight OD interest on $200 when the cheque is presented.

Note that the payer’s account will automatically go into an OD position due to insufficient funds, regardless of whether he has a pre-arranged OD facility and interest charges could apply.

How do you keep track of your transactions?

You can keep track of your cheques in the cheque register (counterfoil) provided in your cheque book. This can help you keep track of the total amount you have paid out in cheques. You can then check these transactions against your bank statements as soon as you receive these.

If you spot any discrepancies, notify your bank immediately or within the time period required by the bank.

 

 

The above information is prepared in collaboration with the Association of Banks in Singapore.