Bounced Cheque

Key Highlights

• A bounced cheque is when someone writes a cheque and the bank will not honor it.

• This can happen for various reasons, such as insufficient funds in the account, a closed account, or an incorrect bank routing number.

What is Bounced Cheque?

A bounced cheque, also known as a returned cheque or a bad cheque, is when someone writes a cheque and the bank will not honor it. This can happen for various reasons, such as insufficient funds in the account, a closed account, or an incorrect bank routing number.

Cheque Bounce Charges

If a cheque bounces, the person who wrote the cheque may be charged a fee by their bank and/or penalties from the recipient of the cheque. In India, these charges are governed by the Reserve Bank of India (RBI). The amount of Cheque Bounce Charges depends on the amount and type of instrument involved in each transaction.

The Cheque Bounce Charges for cheques are usually higher than those of Demand Drafts (DDs) as cheques involve more risks and complexities in settling them. In general, when a cheque is dishonoured due to insufficient funds, customers will be charged anywhere between Rs. 300 - Rs. 500 depending on the size of the instrument and the bank they hold an account with. For DDs, dishonour charges can range from Rs. 100 - Rs. 200 depending on the size of the instrument and bank policy.

How to Avoid Cheque Bounce?

• The best way to avoid writing bounced cheque is to make sure your checking account has sufficient funds before writing any cheque.

• It's also important to keep track of all transactions that are linked with your checking account – this includes any automatic payments you have set up such as loan payments or fees for services you use.

• Additionally, always double-check bank information (account numbers and routing numbers) before handing out any cheque to make sure they are accurate. That way you can avoid any costly fees or legal action related to writing bounced cheques.