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Cheque – 28 Most Expected Questions ⏳ Updated: Apr 2026 | 🎯 28 MCQs
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Under Section 6 of the Negotiable Instruments Act, 1881, a cheque is defined as a bill of exchange drawn on a specified banker and is expressly characterized by
which of the following features?
which of the following features?
Explanation:
Correct: B
A cheque is defined as a bill of exchange drawn on a specified banker and payable on demand. This distinguishes it from other bills of exchange which may be payable after a fixed period.
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In the context of a cheque transaction, which term correctly identifies the person or entity who issues the cheque?
Explanation:
Correct: C
The "Drawer" is the person issuing the cheque. The "Drawee" is the bank on which the cheque is drawn, and the "Payee" is the person receiving the payment.
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According to RBI mandates,
what is the fixed validity period of a cheque calculated from the date printed on the instrument?
what is the fixed validity period of a cheque calculated from the date printed on the instrument?
Explanation:
Correct: B
RBI mandates a fixed validity of 3 months from the printed date. After this period, the instrument is considered a stale cheque and cannot be paid.
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If there is a discrepancy between the amount written in words and the amount written in figures on a cheque, which legal rule applies?
Explanation:
Correct: D
In cases of a mismatch between the amount in words and figures, the Negotiable Instruments Act dictates that the amount in words overrides the amount in figures.
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Which specific legislation empowers the Reserve Bank of India to regulate payment systems, including cheque clearing rules?
Explanation:
Correct: B
The Payment & Settlement Systems Act, 2007, empowers the RBI regarding payment systems. While the NI Act deals with legal rights and dishonour, the operational empowerment comes from the 2007 Act.
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Which of the following statements regarding a "Not Negotiable" crossed cheque is correct?
Explanation:
Correct: B
A "Not Negotiable" cheque is still transferrable; however, the key legal restriction is that the transferee does not get a better title than the person who transferred it.
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What defines a "Post-Dated Cheque" (PDC)?
Explanation:
Correct: C
A Post-Dated Cheque (PDC) is dated for the future and is payable only on or after that specific date. A cheque dated earlier is a "Back-Dated Cheque".
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Which type of cheque is payable specifically to the payee named on the instrument or to a person to whom it has been endorsed?
Explanation:
Correct: B
An Order Cheque is payable to the payee or an endorsed person. In contrast, a Bearer Cheque is payable to the presenter without requiring endorsement.
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Which of the following statements regarding the security features mandated under the CTS-2010 standard for cheques are correct?
1. The cheque leaf must contain a specific watermark reading "CTS INDIA".
2. A "VOID pantograph" is included as a hidden feature that appears only when the cheque is photocopied.
3. A magnetic security thread with denomination is a mandatory feature for all cheques.
4. Micro-lettering and UV-visible bank logos are mandatory features.
1. The cheque leaf must contain a specific watermark reading "CTS INDIA".
2. A "VOID pantograph" is included as a hidden feature that appears only when the cheque is photocopied.
3. A magnetic security thread with denomination is a mandatory feature for all cheques.
4. Micro-lettering and UV-visible bank logos are mandatory features.
Explanation:
Correct: B
The CTS-2010 standard mandates a "CTS INDIA" watermark, a VOID pantograph (to prevent photocopying), and micro-lettering/UV logos. A magnetic security thread with denomination is a feature of currency notes, not a requirement for cheques under this standard.
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Which of the following statements regarding the valid issuance and maintenance of cheques under CTS rules are correct?
1. Any material alteration in the payee or amount fields is strictly prohibited and requires a fresh cheque.
2. To ensure image quality for digital clearing, cheques must be written using blue or black permanent ink.
3. Signing on the back of the cheque is prohibited in all circumstances.
1. Any material alteration in the payee or amount fields is strictly prohibited and requires a fresh cheque.
2. To ensure image quality for digital clearing, cheques must be written using blue or black permanent ink.
3. Signing on the back of the cheque is prohibited in all circumstances.
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Consider the following statements regarding the "One National CTS Grid" operationalized by the Reserve Bank of India:
1. It was operationalized in October 2023.
2. It replaced the earlier system of three separate grids based in New Delhi, Mumbai, and Chennai.
3. Under this system, every CTS-2010 cheque is technically treated as a local cheque regardless of the clearing location.
1. It was operationalized in October 2023.
2. It replaced the earlier system of three separate grids based in New Delhi, Mumbai, and Chennai.
3. Under this system, every CTS-2010 cheque is technically treated as a local cheque regardless of the clearing location.
What is the primary operational implication of the "One National CTS Grid" for cheque clearing in India?
Prior to the implementation of the National CTS Grid, India's clearing infrastructure was divided into three separate grids based in Delhi, Mumbai, and Chennai.
Consider the following statements regarding the "Positive Pay System" (PPS) introduced for cheque clearing:
1. It acts as a fraud-prevention mechanism where the drawer reconfirms key details (date, name of payee, amount) to the bank.
2. The facility is available at the discretion of the account holder for all cheques of value ₹50,000 and above.
3. Banks may consider making it mandatory for cheques of value ₹5 lakh and above.
4. If a customer does not avail of this facility, the cheque may not be accepted under the dispute resolution mechanism.
1. It acts as a fraud-prevention mechanism where the drawer reconfirms key details (date, name of payee, amount) to the bank.
2. The facility is available at the discretion of the account holder for all cheques of value ₹50,000 and above.
3. Banks may consider making it mandatory for cheques of value ₹5 lakh and above.
4. If a customer does not avail of this facility, the cheque may not be accepted under the dispute resolution mechanism.
What is the primary purpose of the "Positive Pay System" (PPS) in the context of cheque clearing?
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Banks have the discretion to make the Positive Pay System (PPS) mandatory for cheques exceeding which value?
Which of the following statements accurately describe the mechanics of "Cheque Truncation"?
1. It involves stopping the physical movement of the cheque and replacing it with an electronic image for clearing.
2. The "Truncation Point" refers to the specific location (e.g., branch or processing center) where the physical cheque is scanned.
3. The physical cheque is immediately destroyed at the counter upon acceptance.
1. It involves stopping the physical movement of the cheque and replacing it with an electronic image for clearing.
2. The "Truncation Point" refers to the specific location (e.g., branch or processing center) where the physical cheque is scanned.
3. The physical cheque is immediately destroyed at the counter upon acceptance.
In the context of modern banking, what does the term "Cheque Truncation" strictly refer to?
In an image-based clearing system, which entity holds the final responsibility for validating the drawer's signature and ensuring the sufficiency of funds before payment?
Which magnetic ink feature on a cheque contains the essential data regarding the bank, branch, and cheque number required for automated processing?
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Consider the following statements regarding the "CCSR" framework introduced by the RBI in August 2025 to replace the legacy batch clearing system:
1. CCSR stands for "Continuous Clearing & Settlement on Realisation".
2. Under this system, if a drawee bank fails to send a "Pay or Return" decision before the "Item Expiry Time", the cheque is automatically returned unpaid.
3. The system triggers "Auto-Approval" (Deemed Paid) for any cheque where the decision deadline is missed.
1. CCSR stands for "Continuous Clearing & Settlement on Realisation".
2. Under this system, if a drawee bank fails to send a "Pay or Return" decision before the "Item Expiry Time", the cheque is automatically returned unpaid.
3. The system triggers "Auto-Approval" (Deemed Paid) for any cheque where the decision deadline is missed.
With reference to the operational windows defined for the Cheque Continuous Clearing system, consider the following statements:
I. The window for Presenting Banks to upload images is from 10:00 AM to 4:00 PM on all business days.
II. The window for Drawee Banks to process and confirm instruments remains open until 7:00 PM.
III. Instruments presented after 4:00 PM are rejected by the system immediately.
I. The window for Presenting Banks to upload images is from 10:00 AM to 4:00 PM on all business days.
II. The window for Drawee Banks to process and confirm instruments remains open until 7:00 PM.
III. Instruments presented after 4:00 PM are rejected by the system immediately.
Identify the correct combination of rules regarding the "Deemed Approval" mechanism in the Continuous Clearing environment:
A cheque is considered "Deemed Approved" if the drawee bank takes no action within the stipulated time.
The expiry time for a cheque presented at 11:00 AM is 5:00 PM on the same day.
Once a cheque is "Deemed Approved," the drawee bank cannot return it through the system.
A cheque is considered "Deemed Approved" if the drawee bank takes no action within the stipulated time.
The expiry time for a cheque presented at 11:00 AM is 5:00 PM on the same day.
Once a cheque is "Deemed Approved," the drawee bank cannot return it through the system.
Under the Continuous Clearing framework, how frequently are the "Settlement Batches" run by the Clearing House to finalize the net positions of participating banks?
Scenario: A corporate customer presents a high-value cheque at 3:55 PM on a Wednesday. The Presenting Bank uploads the image at 3:58 PM (just before the 4:00 PM cutoff). The Drawee Bank receives the image at 4:05 PM. When does the "T+3" processing window expire, and when will the funds settle?
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Which of the following statements regarding the grounds and procedure for the dishonour of cheques are correct?
1. Even if funds are sufficient, a bank is legally prohibited from honouring a cheque if a "Garnishee Order" or Court Freeze order is active against the account.
2. Technical defects in the electronic image, such as unreadable data or markings covering key fields, are valid grounds for return.
3. When returning a cheque unpaid, the bank must legally provide a "Cheque Return Memo" specifying the exact reason code.
1. Even if funds are sufficient, a bank is legally prohibited from honouring a cheque if a "Garnishee Order" or Court Freeze order is active against the account.
2. Technical defects in the electronic image, such as unreadable data or markings covering key fields, are valid grounds for return.
3. When returning a cheque unpaid, the bank must legally provide a "Cheque Return Memo" specifying the exact reason code.
The Reserve Bank of India mandates specific discipline protocols for "High Value" clearing.
Which of the following statements accurately reflect these rules?
1. Banks must maintain special MIS reporting and monitoring for cheques of ₹1 crore and above.
2. In the event of repeated dishonour of such high-value cheques, the bank may take the administrative action of withdrawing the cheque facility from the customer.
Which of the following statements accurately reflect these rules?
1. Banks must maintain special MIS reporting and monitoring for cheques of ₹1 crore and above.
2. In the event of repeated dishonour of such high-value cheques, the bank may take the administrative action of withdrawing the cheque facility from the customer.
If a cheque is lost in transit or during the clearing process, the bank is liable to compensate the customer in
which of the following ways?
1. The bank must immediately inform the customer to facilitate a stop-payment instruction.
2. The bank must reimburse the customer for actual charges incurred in obtaining a duplicate cheque.
3. The bank must pay interest for the period of delay caused by the loss, as per its collection policy.
which of the following ways?
1. The bank must immediately inform the customer to facilitate a stop-payment instruction.
2. The bank must reimburse the customer for actual charges incurred in obtaining a duplicate cheque.
3. The bank must pay interest for the period of delay caused by the loss, as per its collection policy.
Looking for the most important Cheque questions for your upcoming exams? We have analyzed past papers for Bank PO & JAIIB to bring you the 28 most expected questions. Take the live test, review the blueprint, and master the core concepts.
- 🚀 Updated for 2026: Aligned with the latest Bank PO & JAIIB syllabus.
- 🧠 Output & Concept Based: Covers basics to advanced scenarios.
- 📊 Live Gamification: Track your score and time dynamically.
- 📥 Free PDF Notes: Available instantly via our Telegram channel.
Test Blueprint & Topic Weightage
| Negotiable Instruments & Basics | Q1 – Q8 | Easy to Medium |
| CTS & Positive Pay Framework | Q9 – Q20 | Medium |
| Continuous Clearing (CCSR) & Penalties | Q21 – Q28 | Hard |
⚠️ Examiner Trap Alert: Many students confuse the continuous processing window (T+3 hours) with the daily settlement batch cut-offs. Remember that while a cheque may be “Deemed Approved” after 3 hours, if this happens after the final 7:00 PM batch, it will not actually settle until the next business day!
Practice Cheque related Questions (Live Mock Test)
⏱️ Estimated Time: 42 Minutes | 🎯 Target Score: 22+ | 📊 Difficulty: Moderate to Hard
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High-Yield Core Concepts
Cheque Validity: RBI mandates a strict 3-month validity for cheques from the printed date under the Negotiable Instruments Act.
Order of Precedence: In case of a discrepancy on a cheque, the amount written in words legally overrides the numerical figures.
Positive Pay System: A fraud-prevention tool for cheques ₹50,000+ where drawers pre-confirm critical details with their bank.
Deemed Approval: In Continuous Clearing, if a drawee bank misses the T+3 hour decision deadline, the cheque is automatically treated as paid.
Semantic Comparison: Cheque Truncation System vs Traditional Batch Clearing
| Core Definition | Electronic transmission of cheque images (MICR + Visuals) | Physical movement and sorting of paper cheques |
| Primary Use Case | Fast, national-level digital clearing (One National Grid) | Localized, physical branch-to-branch clearing |
| Exam Importance | Highly tested, modern banking framework focus | Historical context, rarely tested directly |
Frequently Asked Questions
Why is the Cheque Truncation System critical for Bank PO & JAIIB?
It is a consistently high-scoring area. Examiners frequently repeat core concepts from this section, especially regarding newer continuous clearing rules.
Does this mock test cover the full syllabus?
Yes, these questions target the most highly-weighted concepts found in previous years’ papers, spanning the NI Act to modern CTS updates.
What are the most repeated topics?
Based on our blueprint, CTS & Positive Pay Framework and Continuous Clearing (CCSR) carry the highest conceptual weightage.