For how long is a cheque valid from the date written on it, under the present direction of the Reserve Bank of India?
- A.One month
- B.Three months
- C.Six months
- D.One year
Correct answer
Explanation
The correct answer is B, three months. The Reserve Bank of India directed that cheques, drafts, pay orders and banker's cheques would be payable for three months from the date of the instrument, with effect from 1 April 2012, cutting the earlier period of six months. A cheque presented after that period is called a stale or out of date cheque and is returned unpaid.
Option A, one month, is the period within which a complaint must be filed after the cause of action arises under Section 138, and candidates often import it here. Option C, six months, was the position before April 2012 and remains the commonest wrong answer. Option D, one year, has never been the rule. Note also that the validity runs from the date written on the cheque, so an ante-dated cheque is good only for three months from that written date.
Read the full article: Negotiable Instruments and Cheques: Act, Sections and PYQs
Practice Questions
View allA paper instructing the bank to pay a specific amount from a person's account to another person in whose name it has been issued is known as:
- A.cash
- B.cheque
- C.passbook
- D.currency
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Section 6 of the Negotiable Instruments Act, 1881 defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
Read the full explanation →A cheque returned by bank marked NSF means that
- A.Bank cannot verify your identity
- B.There are not sufficient funds in your account
- C.Cheque has been forged
- D.Cheque cannot be cashed being illegal
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NSF stands for not sufficient funds, and a bank writes it on the return memo when the balance in the drawer's account is less than the amount of the cheque.
Read the full explanation →Negotiable Instrument Act was introduced in
- A.1972
- B.1881
- C.1957
- D.1950
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The Negotiable Instruments Act was enacted in 1881 and came into force on 1 March 1882.
Read the full explanation →The payment of a negotiable instrument becomes due
- A.at maturity
- B.after maturity
- C.before maturity
- D.on third day of maturity
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Section 22 of the Negotiable Instruments Act, 1881 says that the maturity of a promissory note or bill of exchange payable otherwise than on demand is the date on which it falls due, and the three days of grace are already counted in arriving at that date.
Read the full explanation →Which section of the Negotiable Instruments Act, 1881 defines a cheque?
- A.Section 4
- B.Section 5
- C.Section 6
- D.Section 13
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Section 6 says a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, and it goes on to include the electronic image of a truncated cheque and a cheque in the electronic form, both added by the amendment…
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