Cheque Bounce: Legal Consequences And Prevention Tips

Outlook Money

Cheque Bounce

Cheque bounce occurs when a bank refuses to process a cheque issued by an account holder due to a lack of sufficient funds in the account.

Reasons for Bounce

The two main reasons for a cheque bounce are if the account holder has not kept enough funds in his/her account or if the cheque has misplaced limits, which means that the amount on the cheque exceeds the agreement made between the account holder and the bank. It also includes signature mismatch.

Legal Perspective

Cheque bounce is considered a criminal offense. Legal experts outline its potential repercussions: imprisonment for up to two years, financial fines up to twice the cheque amount, or a combination of both penalties in certain situations.

Consequences

Apart from the legal consequences, other outcomes include penalty charges ranging between Rs 50 and Rs 750. It includes interest claims and the difficulty in getting credit in the future. 

How to avoid cheque bounces

To avoid cheque bounces, one should carefully read and understand its legal perspectives and should prefer online transactions wherever possible. 

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