Question

Kinds of Negotiable Instruments
_____ means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.

• A. A cheque in the electronic form
• B. A truncated cheque
• C. A bank draft
• D. A paper cheque

Answer 1

Answer: (B)

A truncated cheque

Cheque truncation is the conversion of a physical cheque into a substitute electronic form for transmission to the paying bank. Cheque truncation reduces or eliminates the physical movement of cheques and reduces the time and cost of processing the cheque clearance system. Under section 6 of the NI Act, 1881, it means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.