Know the Important Guidelines for Bounced Cheques

A "dishonored cheque" is the term used in banking to refer to a bounced cheque. Despite its seemingly trivial nature, bouncing a cheque is considered a criminal offense under Section 138 of the Negotiable Instruments Act of 1881.

While cheques may not be as commonly used now with the availability of UPI and Net Banking, they still hold significant value, particularly for larger financial transactions. Additionally, cancelled cheques are often requested for various administrative purposes.

Completing tasks that require cheque transactions becomes impossible without them. Therefore, it's crucial to fill out cheques accurately when making payments, as even minor errors can lead to bouncing. A bounced cheque indicates that the intended recipient was unable to receive the funds specified in the cheque.

In the banking industry, bounced cheques are commonly referred to as dishonored cheques. While you might not consider them significant issues, they are deemed criminal offenses under Section 138 of the Negotiable Instruments Act of 1881.

Consequences for bouncing a cheque can include a two-year jail sentence, a fine, or both. However, it's essential to note that bouncing a cheque doesn't immediately result in criminal charges. Initially, banks typically offer the opportunity to rectify the error.

Reasons For Cheque Bounce :-

1. No Or Low Balance In Account
2. Signature Mismatch
3. Spelling Mistake
4. Mistake In Account Number
5. Over Writing
6. Cheque Expiration
7. Closure Of Cheque Issuer’s Account
8. Suspicion Of Forged Cheque
9. No Company Stamp On the Cheque Etc.

Everyone have the opportunity to rectify a bounced cheque error; it doesn't automatically result in legal action against you. Typically, the bank notifies you first if your cheque bounces. You then have three months to provide the creditor with a replacement cheque. However, if the second cheque also bounces, the creditor may pursue legal action against you.

Banks impose a fee when a cheque bounces, and it's the responsibility of the issuer to cover this fine. The amount of the fine may vary, with each bank setting its own fee structure. Typically, fines range between Rs 150 and Rs 750 or Rs 800.