Updated on May 14, 2022 12:53:52 PM
Cheque bounce happens when the bank refuses to issue the amount mentioned in the cheque by the payer(account holder). The bank provides a memo with the reasons for declining the cheque. The first step is to send this memo to the person who had provided you with the cheque and ask him to pay the amount to you. If the payee refuses then you need to go further which will be explained here.
Cheque bounce simply means the cheque issued to the payee, but the amount could not be withdrawn through the cheque due to some reasons. All those particular reasons will be discussed later. If you have a bit of confusion about the cheque, let us clear it for you.
A cheque is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account in the bank where their money is held.
A bank can refuse to make payments for the cheque due to inconsistency in the amount, bad condition of cheque, and many more. Let’s discuss the possible reasons when a cheque bounces in detail.
The possible reasons for cheque bounce could be as follows:
Sometimes if the amount is very large and the bank does not have that amount at that time then they can also dishonour the cheque.
In case when your cheque bounces then you have to file a case for cheque bounce
[Note: You can also file for a civil suit for recovery of the cheque amount, along with the cost borne and the lost interest.]
Penalties taken by different banks are not the same for cheque bounces. Cheque bounce charges in SBI may vary with the charges with HDFC bank for Cheque bounce. You can have a look at the table to understand it in a better way.
|Name of the Banks||Charges|
|SBI||Cheque/bill deposited with SBI returned unpaid by others (Local/ Outstation)
|HDFC Bank||Savings A/c
Dishonour of Outstation Cheques
|ICICI Bank||Local Charges
|Axis Bank||Return of cheques deposited at the home branch for local clearing – ₹500/- per cheque|
|Bank of Baroda||Cheque (deposited by BOB’s customer and returned unpaid (Inward Return)
The Negotiable Instruments Act,1881 applies to the cases related to cheque bounces in India. According to this law, cheque bounces(giving a bounced cheque to someone) is a punishable offence and can cause imprisonment for two years, penalty, or both in some cases.
The provision states that someone who commits an offence under Section 138 faces a sentence of up to two years in prison or a fine of up to twice the value of the check, or both. In the event of a default due to check dishonour, the section is one of the most often invoked clauses by a lender.
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