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What does a Cheque Bounce mean & its Reasons & Punishment?

When it comes transferring or paying any sort of money to a person, another person who owns an account should use some of the money payable formats. Such as, cash payments, cheques, Net Banking and others. A cheque is an instrument using which  a person pay or transfer an amount from their account. Commonly there are two parties involved and they are the person who writes a cheque is called as a drawer and the one who receives that cheque is a drawee.

Meaning of Cheque Bounce

A cheque is written from a drawer to the drawee, with some initial amount scribbled on it. Every time a cheque needs to be written in a certain format. And a drawer need to have sufficient amount in his or her account at the time of writing a cheque. Unfortunately, if a drawer failed to maintain that much amount in their account, then the drawee’s cheque will receive a bounce back signs. This is also called dishonor of Cheque. And writing a bounce cheque is a punishable offense, which cause damage to the drawer of the cheque.

Also Read : What are the Types of Cheques ?

Possible Reasons for a Cheque Bounce

Other than insufficient funds, a cheque can be bounced of many possible reasons. And they are as follows,

1) Mismatched Signatures

There is a possibility that when a drawer writes a cheque and puts signatures on it. Then it’s possible that while writing that signature the drawer might miss some of the initials. And at that time when a drawee submits that cheque to the bank. The bank or any other financial institutions verify the drawer signatures from the records. And if they find it different from the actual signatures, then there is a chance of getting a cheque bounced.

2) Wrong Account Number

When a drawee receives the cheque, then the drawer need to write down all the necessary details in the cheque for the further process. Moreover, the cheque is an account, payee, then the drawer need to write down a correct account details in the cheque leaf. Therefore, it is necessary to fill in the account details correctly, otherwise the cheque drawn to an individual can be bounced or rejected at a very moment.

3) Post Dated Cheque

A cheque hold minimum of three to six months of time, and within that given three to six months of the time the cheque should be submitted to the bank. And if by any chance the cheque gets received by the after the given period of cheque acceptance. Then the cheque is probably going to get rejected without any second thoughts. Therefore, the drawer and drawee need to check the dates given the cheque leaf for clearance.

4) Cheque presented at the Wrong Branch

At the time of issuing the cheque the drawee should check all details filled inside the cake. Once the cheque gets verified properly, the drawee need to check for the branch office of the bank. And from where that particular cheque could be cleared. The branch address of the bank is necessary at the time of clearing the cheque. And that is because the branch of the drawer’s bank account releases the amount issued in that particular cheque leaf.

Punishment for Cheque Bounce

When a cheque receives a rejection or bounced back from the bank, at that time the drawer will be liable to face some serious legal problems from the drawee. Moreover,  the drawee even can file a legal case against the drawer under the section and act of the government.

Therefore, all the above mentioned information regarding bounced cheque can be a learning experience for all people. Even this can help others to know more facts about the cheque bounce or dishonor of Cheque and their legal terms.

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