A Cheque Bounce notice serves as an intimation to the issuer that legal action will be taken by the cheque beneficiary in case of non-payment of the cheque amount on an immediate basis. It is a serious offence under the Negotiable Instruments Act and can result in penalties, fines, or even imprisonment. This notice is a crucial step in the process of recovering the unpaid amount.
A "bill of exchange" that is payable immediately on demand is a check. The issuer of the cheque is known as the 'drawer,' while the person or entity in whose favour the cheque is issued is known as the 'drawee.' Cheques are commonly used for various transactions, including loan repayments, salary payments, bill settlements, and more.Learn More
To send a Cheque Bounce notice, follow these steps:
A Cheque Bounce notice can be issued under the following circumstances:
If the drawer fails to make payment within 15 days from the receipt of the notice, legal action can be initiated. Here's the procedure:
This is one of the most common reasons for a cheque to bounce. When the drawer writes a cheque, they are essentially directing their bank to pay a certain amount to the payee from their account. If the account does not have sufficient funds to cover the cheque amount when it is presented to the bank, the cheque will bounce. The bank will return the cheque to the payee with a memo stating "insufficient funds."
A cheque has a limited validity period, usually three months from the date of issuance. If the payee presents the cheque to the bank after this validity period has expired, the cheque becomes invalid, and the bank will not honour it. The payee should ensure they present the cheque for payment within the specified validity period.
Any alterations or overwriting on the cheque can lead to suspicion and rejection. If there are corrections, changes, or overwriting on crucial details like the payee's name, the cheque amount (in figures or words), or the date, the bank may consider the cheque as potentially fraudulent. Banks prefer clean and unaltered cheques.
If a cheque is physically damaged or disfigured in a way that essential details are not clearly visible, the bank may refuse to honour it. Stains, marks, or tears that obscure important information on the cheque can result in rejection. It's essential to keep cheques in good condition.
The signature on the cheque is compared with the specimen signature available with the bank. If the signature on the cheque does not match the authorized signature held by the bank, it raises suspicions of fraud or forgery. In such cases, the bank may reject the cheque.
Cheques require the amount to be written both in words and figures. If there is a discrepancy between the amount written in words and the amount in figures, it can lead to confusion and rejection. The two amounts should match precisely.
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