A special crossing on a cheque is a specific instruction to the paying bank, ensuring enhanced security by directing payment exclusively to a designated bank. Unlike a general crossing, which allows payment through any bank, a special crossing explicitly names the bank through which the cheque must be cleared.
Understanding Special Crossing
When a cheque features a special crossing, it bears an addition across its face: the name of a specific banker. This can be accompanied by the words "not negotiable," though this phrase is optional. The primary purpose of this type of crossing is to safeguard the payment process.
Key Characteristics of a Special Crossing
- Named Banker: The most distinguishing feature is the inclusion of a specific bank's name across the cheque.
- Exclusive Payment Channel: The paying banker is obligated to pay the amount of the cheque only to the banker whose name appears in the crossing or to their appointed collecting agent. This means the cheque cannot be paid over the counter and must go through the specified bank.
- Enhanced Security: By restricting the payment channel to a particular bank, a special crossing significantly reduces the risk of fraud or unauthorized collection, as the funds are traceable and pass through a known financial institution.
- Optional "Not Negotiable" Clause: Adding "not negotiable" does not prevent the cheque from being transferred but deprives any subsequent holder of the cheque of the status of a holder in due course if the transferor's title was defective.
How Special Crossing Works
Consider the following points to understand the practical implications:
- Issuance: When a cheque drawer (the person writing the cheque) wants to ensure maximum security for a payment, they can draw two parallel lines across the face of the cheque and write the name of the payee's bank within or between these lines.
- Collection Process: The payee (the person receiving the cheque) must deposit it into an account held at the bank specified in the crossing. If they bank with a different institution, that bank must forward the cheque to the named bank for collection, or the payee must deposit it directly with the named bank.
- Payer's Responsibility: The bank on which the cheque is drawn (the paying banker) is strictly bound to honor the crossing instruction. Any payment made in contravention of this direction would be considered an unauthorized payment, and the paying banker might be held liable for any loss incurred.
Comparison: Special vs. General Crossing
To further clarify, here's a brief comparison:
| Feature | General Crossing | Special Crossing |
|---|---|---|
| Marking | Two parallel transverse lines. | Two parallel transverse lines with a bank's name inside. |
| Payment Mode | Through any bank. | Through a specific named bank only. |
| Security Level | Good security, but less restrictive. | Higher security due to specific bank requirement. |
| Example | Account Payee Only or just & Co. |
State Bank of India |
For more detailed information on various types of cheque crossings, you can refer to resources on negotiable instruments, such as guides on Types of Cheque Crossing.
By specifying the bank, a special crossing adds an extra layer of control and traceability, making it a powerful tool for secure financial transactions.
