Users' questions 

What are the conditions for Dishonour of cheque?

Leia Doyle

What are the conditions for Dishonour of cheque?

What are the possible reasons due to which a bank can dishonour a cheque?

  • Insufficient funds in the payer’s bank account.
  • Signature missing or mismatch.
  • Account number mismatch.
  • Issue with the date of the cheque.
  • Mismatch in the amount in words and numbers.
  • Disfigured or damaged cheque.
  • Crossing limit of the overdraft.

What are the reasons why a cheque may be Dishonoured?

Reasons for Dishonour of Cheque

  • If the cheque is overwritten.
  • If the signature is absent or the signature in the cheque does not match with the specimen signature kept by the bank.
  • If the name of the payee is absent or not clearly written.
  • If the amount written in words and figures does not match with each other.

What is meant by Dishonour of cheque?

If a cheque is dishonoured because funds in the payer’s account were insufficient, it is a criminal offence under the Negotiable Instruments Act of 1881. The payer may be prosecuted for issuing a cheque against an account with insufficient funds.

How can cheque Dishonour be avoided?

It is advisable always to issue checks against actual funds in an account and not anticipated funds. . Signature Mismatch is a very common reason for bouncing cheques; i.e. where the signature appended by the issuer does not match the bank’s records.

Can bounced Cheque be deposited again?

Answer: Yes, you can present the cheque again in the bank for payment, even if it was dishonoured on the first occasion. However, it goes without saying that the cheque can be presented again in the bank only during the period of its validity. Normally, the period of validity of the cheque is 3 months.

What happens when a cheque bounces?

In India, a person issuing a cheque will be committing a criminal offence if the cheque is dishonoured (cheque bounce) for insufficiency of funds. Cheque bounce offence is punishable with imprisonment for a term up to two years or with a fine twice the amount of the cheque or both.

Can a bank refuse a cheque?

Cheques are not legal tender and never have been. Even today, if you owe someone money they are not obliged to accept a cheque. A creditor is entitled to be paid in legal tender and can refuse payment in any other form.

Why do Cheques get rejected?

1) Insufficient funds: The cheque amount is more than the free balance available in the drawer’s bank account. 2) Irregular signature: The signature of the drawer on the cheque does not match the specimen signature available with the bank. The drawer signs near it to verify any other alteration.

Can we transfer money through cheque?

You can transfer money from your one account to another account by cheque. You have to simply draw a stating payee as your name along with the account number wherein you want to transfer the amount along with your signature. Through a cheque, you cannot withdraw more than Rs 50,000 from a non-home branch.

What is the rule of Cheque bounce?

When the cheque bounces due to insufficient funds and is returned by the bank, the payee should send a legal notice to the drawer of the cheque asking to make the payment. Cheque bounce is an offence under Section 138 of the Negotiable Instruments Act, 1881 in India.