Is it legal to post-date checks?
Although it is legal to post-date a check, the bank to which the check is presented for payment may charge the payor’s account even before the date of the check and even if doing so creates an overdraft.
What happens if a check is post-dated?
Postdated checks are checks written with a future date. Postdated checks can usually be cashed or deposited at any time unless the person who wrote the check specifically told their bank not to honor the check until a certain date.
Do banks accept post-dated checks?
Can a bank or credit union cash a post-dated check before the date on the check? Yes. Banks and credit unions generally don’t have to wait until the date you put on a check to cash it. However, state law may require the bank or credit union to wait to cash the check if you give it reasonable notice.
How long can a check be post-dated?
In some states, if a consumer gives the financial institution reasonably timed written notice about a postdated check before the check is received, then the notice is valid for up to six months.
How do I issue a PDC?
If you are a drawer of the cheque and if you have issued a post-dated cheque to the recipient, it implies that a written communication from your end to the recipient asking him to wait for the time, from the date the cheque is physically issued till the date mentioned in the face of the cheque.
What is an advantage of writing post dated Cheques?
It acts as an instalment payment system where the payer does not have to pay the amount at one go or at the specified time. It helps the payer cover his position for lack of funds by buying some time before making future payments. It helps in the seamless operation of business.
What is an advantage of writing post-dated cheques?
Will a post-dated check clear?
Generally, state law provides that if you notified your bank or credit union about a post-dated check a reasonable time before it received the check, your notice is valid for six months. During that time, the bank or credit union should not cash the check before the date you wrote on the check.
Why would a business issue post dated Cheques?
A post dated check is a check on which the issuer has stated a date later than the current date. It is used when the issuer wants to delay payment to the recipient, while the recipient may accept it simply because the check represents a firm date on which it will be able to deposit the check.
What is PDC process?
It is a standard banking practice in some countries to request post-dated checks for the retail Loan repayments. When Loan are sanctioned, the lending institution collects post-dated checks in advance from the Loan recipient – at times for the full tenor of the Loan .
Why would a business issue post-dated cheques?
So, the story of the post-dated cheque is that you don’t have sufficient balance on the date the drawee demands the sum from you and you issue him a post-dated cheque with a future date. This is kind of giving assurance to the recipient or the drawee that on this future date, the payment will be honoured.
What is one disadvantage of writing post-dated cheques?
If the bank does not spot that the cheque has been post-dated, the cheque would then probably be paid before you intended or returned unpaid if you have insufficient funds in your account. This could potentially incur you charges and cause inconvenience to the recipient.
How are post-dated cheques treated in accounting?
A post-dated cheque is one that the recipient can encash on a future date. Such cheques are not payable until the date written on the face of the cheque. In the accounting books of both the issuer and the recipient, the transaction will not be recorded until the date provided on the cheque.
How do I issue a PDC cheque?
Generally, if you write a cheque, you will write the current date of the cheque i.e., 27th Jan. But when you write a date which is later than the current date, say you write a date of a cheque as 3rd Feb, this is when it becomes post-dated cheque.
Why is PDC needed?
The lending institution loses its payment from the customer and may levy penalties such as late fees and insufficient funds charges which can lead to customer dissatisfaction. Hence, the utmost care should be taken while servicing the Loan accounts using PDC.
What is the advantage of writing a post-dated cheque?
Can PDC be Cancelled?
The Supreme Court has ruled that stopping the payment of a post-dated cheque, issued to discharge debt or liability, is a criminal offence under the Negotiable Instruments Act. Cheques and similar instruments used in commercial transactions should inspire confidence, the court stated.
How do you use PDC?
Aside from the date and amount (in number and word format), carefully write down the recipient’s name and refrain from making any erasures or errors that would make the PDC void. Once all the blanks have been filled correctly, scribble your signature on the lower right-hand line.
What happens if a post-dated check bounces?
As per Section 138 under the Negotiable Instruments Act, 1881, Supreme Court’s cheque bounce case judgement, by the bill of exchange, means that the document will stay negotiable and will turn into cheque only on the date it will be payable on demand.
What PDC means?
post-dated check
PDC is short for post-dated check, which is given by an issuer to a recipient as form of payment ahead of time. What makes a PDC different from a regular check? You use the same check format for a regular check and a PDC.
Is PDC safe?
PDCs are the most favoured system by lenders across the country, as it is considered “fail-safe”, in case the borrower defaults. In case of default in repayment through PDC, the borrower can be tried under Section 138/142 of the Negotiable Instruments Act, 1881.
Can post dated check be Dishonour?
According to the meaning of the post-dated check itself, once PDC becomes a check, i.e. from the date it is payable on demand, a legitimate liability is then applied as issued. But the check will only be dishonored because of insufficient funds or the reasons specified in the Act.
How do you deal with post-dated cheques?
There are no specific rules on how banks deal with post-dated cheques if they are paid in before the due date. However, it’s likely that if your bank spots a post-dated cheque that you have written, it will return it with the reason given as “post-dated cheque”.
What happens if a post dated check bounces?