What is Drawer in Cheque and How Does It Work

What is Drawer in Cheque?

In the context of a cheque, the drawer is the person or entity who writes and signs the cheque to instruct their bank to pay a certain amount of money. In India, when you open a bank account, the cheque book you receive allows you to make payments directly from your account by drawing on the funds held with the bank. The person who fills in the cheque details such as date, payee’s name, amount (in figures and words), and signs it is known legally as the drawer.

Under Indian banking practice, the drawer plays a central role in the cheque transaction. The drawer is often the account holder (individual or business) whose funds are being utilized. For example, if Mr. Sharma receives a cheque book from his bank, each cheque he signs and gives to a vendor or friend is drawn by Mr. Sharma. In effect, he is telling his bank: “Pay ₹5,000 to Mr. Mehta,” or similar instructions, by issuing a cheque.

Legally, the definition of a drawer comes from the Negotiable Instruments Act, 1881, which governs cheques, promissory notes, and bills of exchange in India. Section 6 of this Act states that a drawer is the person who makes or draws a bill of exchange or, in our case, a cheque ordering the bank to pay a certain sum to someone else. By signing, the drawer creates a negotiable instrument (the cheque), which can be transferred or deposited by the payee.

Key points about the drawer in India:

Account Ownership: The drawer must hold a valid bank account. The cheque draws funds from this account.

• Signature: Only the signature(s) authorized by the bank (usually on the account opening form) will be accepted. If the signature on the cheque does not match the specimen signature, the bank can dishonor the cheque.
• Chequebook Issuance: Banks in India issue cheque books to customers once they have an active account. The drawer takes responsibility for keeping the cheque book secure and ensuring cheques are not misused.
• Legal Liability: If a drawer issues a cheque knowing that there are insufficient funds, the cheque can be dishonored for “insufficient funds.” Under Section 138 of the Negotiable Instruments Act, that can lead to legal consequences, including penalties and even imprisonment.

By understanding the drawer’s role, Indian account holders can appreciate that writing a cheque is a formal instruction to the bank. The drawer must ensure there are enough funds in the account, avoid tampering with cheque details, and sign in the prescribed manner to make the cheque valid.

How Does Drawer in Cheque Work?

When a drawer issues a cheque in India, a specific sequence of steps and legal requirements must be followed to ensure the cheque is honored. Below is a clear, step-by-step explanation of how the drawer’s instructions become a payment:

Filling Out the Cheque:

• The drawer writes the date in the top right corner. In India, the format is usually dd/mm/yyyy (for example, 05/06/2025).
• In the “Pay” line, the drawer writes the name of the payee the person or entity who should receive the money. For instance, “Pay to the order of Mr. Rajesh Kumar.”
• Next, the amount in figures is written in the box (for example, “₹10,000.00”). Care must be taken to avoid tampering; any blank space should be crossed out.
• Below the “Pay” line, the drawer writes the amount in words (for example, “Rupees Ten Thousand Only”). This helps prevent fraud; if there is inconsistency between figures and words, banks in India typically consider the amount in words as the correct one.
• The drawer can optionally write a “not negotiable” or “account payee only” clause by crossing and stamping the cheque in the upper left corner. Crossing a cheque with these words ensures it cannot be cashed over the counter and must be deposited directly into the payee’s bank account, reducing misuse.

Signing the Cheque:

• The drawer signs the cheque on the bottom right line, using their signature as on record with the bank. If an account requires two signatories, both might need to sign.
• A valid signature is crucial; if the signature does not match the bank’s record, the bank may refuse to honor the cheque.

Issuing the Cheque to the Payee:

• Once signed, the drawer hands over or mails the cheque to the payee. For example, if a supplier has delivered goods, the buyer (drawer) will give the cheque to the supplier (payee) as payment.
• It is advisable for the drawer to maintain a cheque register or counterfoil entry. Most cheque books in India have a counterfoil that records the cheque number, date, payee’s name, and amount. This helps the drawer keep track of issued cheques, preventing misuse.

Deposit and Clearing:

• The payee deposits the cheque into their own bank account. This might be in person at a branch or through an ATM or mobile banking deposit (if the bank supports scan-and-deposit features).
• The payee’s bank then sends the cheque to the clearinghouse. In India, most cheques go through either the “MICR” (Magnetic Ink Character Recognition) clearing for local cheques or the “CTS-2010” (Cheque Truncation System) for inter-city cheques.
• The drawer’s bank receives the cheque presentation electronically or physically. The bank checks if the drawer’s account has sufficient funds and verifies signature, date, and other required details.

Payment or Dishonor:

• If all conditions are met sufficient funds, valid signature, proper date, and clear instructions the drawer’s bank debits the drawer’s account and transfers the funds to the paying bank (the payee’s bank). This process usually takes one or two working days in India (clearing cycles).
• If something is wrong (for example, insufficient funds, signature mismatch, or stale cheque older than three months in India), the bank returns (dishonors) the cheque to the presenting bank with a specific “return memo” code (e.g., “Insufficient Funds,” “Signature Mismatch,” “Date Exceeds Validity”). The payee’s bank then informs the payee that payment has failed.

Legal and Practical Considerations for the Drawer:

• Once the cheque is issued, the drawer cannot easily revoke payment unless they issue a stop payment request to their bank before the cheque is presented for clearing. While banks typically accept “stop payment” instructions, it must be done before the cheque reaches the clearing cycle.
• If a cheque is dishonored for insufficient funds, the payee can demand payment in cash or ask the drawer to issue a demand notice. Under Section 138 of the Negotiable Instruments Act, if the drawer fails to make good the amount within 15 days of receiving notice, the payee can file a criminal complaint. This means returning a cheque due to insufficient funds is a serious matter in India, and drawers must ensure they maintain adequate balance.
• Drawers should always retain copies or records of issued cheques (e.g., photographs or clear scans of the cheque before handing it over). This helps in case of disputes, such as the payee tampering with the cheque details or forging endorsements.