Understanding the Charges for Cheque Bounce

Updated on : Feb. 4, 2023 - 2 p.m. 17 min read.

Cheque Bounce Meaning

A check bounce happens when a bank returns a check that was made to pay for goods or services because there aren't enough funds in the account to support the payment. This may occur for a number of reasons, including the account having no balance, being closed, or being frozen as a result of possible fraud.A bounced check will typically result in a fee being assessed by the bank to the account holder and maybe also to the payee (the person or entity to whom the check was sent). The payee may potentially decide to file a lawsuit in an effort to get their money back, or they may try to work out a payment arrangement with the payer.

It is crucial to move quickly to address the situation if you have received a bounced check. If the situation cannot be settled peacefully, you might need to contact the account holder to request payment, or you could need to call an attorney.

Cheque Bounce Case

To file a cheque bounce case, the person to whom the cheque was issued must first send a written demand notice to the issuer of the cheque, asking for payment within 15 days. If the issuer does not pay within 15 days, the person can file a complaint with the police. The complaint must be filed within 30 days of the cheque bouncing.

In a cheque bounce case, the burden of proof is on the complainant to prove that the cheque was issued with the intention to not honor it. To prove this intention, the complainant must show that the issuer had insufficient funds in the account at the time the cheque was issued, or that the issuer had knowledge of this insufficiency.

When a cheque bounce takes place?

A cheque bounces when the funds in the account from which the cheque was drawn are insufficient to cover the amount of the cheque. This can occur for various reasons, such as:

Insufficient funds: If there is not enough money in the account to cover the cheque, it will be returned as a bounced cheque.

Closed account: If the account from which the cheque was drawn has been closed, the cheque will be returned as a bounced cheque.

Frozen account: If the account has been frozen by the bank due to suspected fraudulent activity, the cheque will be returned as a bounced cheque.

Stale-dated cheque: If the cheque is more than 6 months old, it will be returned as a stale-dated cheque.

Incorrect account information: If the cheque was written with incorrect account information, such as the wrong account number or routing number, it will be returned as a bounced cheque.

In any case, a bounced cheque can be an inconvenience for both the payee and the account holder, and it is important to take steps to resolve the issue promptly.

Cheque Bounce Charges Amount

The amount of charges for a bounced check in India can vary depending on several factors, such as the amount of the check, the reason for the bounce, and the policies of the bank where the check was issued.

Typically, banks in India charge a fee for each bounced check, which can range from a few hundred rupees to several thousand rupees. The exact amount of the fee will depend on the bank's policy, so it's advisable to check with your bank for more information.

In addition to the bank fee, the issuer of a bounced check may also be subject to criminal charges if the bounce was caused by fraud or if the issuer knew that there were insufficient funds in the account when the check was issued. The exact amount of the fine for this offense will depend on the circumstances of the case and the decision of the court.

It's important to note that the person to whom the cheque was issued can also take civil action against the issuer for the amount of the check, and can recover damages for any expenses incurred as a result of the bounced check, such as legal fees.

Cheque Bounce Notice

A cheque bounce notice is a formal letter that is sent by a bank to inform the recipient that a cheque they deposited has been returned due to insufficient funds in the account from which it was drawn. The notice typically includes the following information:

Date of the cheque bounce: The date on which the bank returned the cheque due to insufficient funds.

Details of the cheque: The cheque number, amount, and name of the account holder.

Reason for the bounce: The reason for the cheque being returned, such as insufficient funds, closed account, frozen account, stale-dated cheque, or incorrect account information.

Fees incurred: The fees amount incurred by the recipient for the cheque bounce.

Next steps: Information on what the recipient should do next, such as negotiating a payment plan with the account holder, taking legal action to recover the amount of the cheque, or seeking the assistance of an attorney.

The cheque bounce notice serves as official documentation of the cheque bounce, and it is important to keep a copy for future reference. If the recipient has any questions or concerns, they should contact their bank for clarification.

How to issue a cheque bounce notice?

To issue a cheque bounce notice, follow these steps:

Gather information: Collect the details of the bounced cheque, including the date, cheque number, amount, and name of the account holder.

Write the notice: Draft a formal letter that includes the details of the bounced cheque and the reason for the bounce. Also, include the fees incurred by the recipient, and any relevant information on what they should do next.

Contact the account holder: Try to contact the account holder to negotiate a payment plan or to discuss the issue and find a resolution.

Send the notice: Once the notice is ready, send it via certified mail, return the receipt requested, or hand-deliver it to the account holder. Keep a copy for your records.

Follow up: If the recipient does not respond or takes no action, consider seeking the assistance of an attorney or taking legal action to recover the amount of the cheque.

It is important to remember that a cheque bounce notice serves as official documentation of the cheque bounce and should be issued promptly to avoid further legal or financial consequences.

Legal Action against cheque bounce

Legal action against a bounced cheque can be taken as a means to recover the amount of the cheque if it is not paid by the account holder. Here are the steps to take legal action against a bounced cheque:

Send a demand notice: Send a formal demand notice to the account holder, requesting payment of the bounced cheque and explaining the consequences of non-payment.

File a complaint: If the demand notice is ignored or if the account holder does not respond, file a complaint with the nearest police station.

Obtain a non-bailable warrant: If the police do not take any action, obtain a non-bailable warrant from the court, which will require the account holder to appear in court.

Attend court hearing: Attend the court hearing, and provide evidence of the bounced cheque, including the cheque, demand notice, and any other relevant documentation.

Receive judgment: If the court finds it in your favor, the account holder will be ordered to pay the amount of the bounced cheque, plus any interest, costs, and legal fees.

It is important to note that legal action against a bounced cheque can be time-consuming and expensive, and it may not guarantee recovery of the amount of the cheque. Before taking legal action, it is advisable to consider alternative means of resolving the issue, such as negotiating a payment plan with the account holder or seeking the assistance of an attorney.

Timeframe for reporting a bounced cheque

In India, the Reserve Bank of India requires banks to return a cheque within 30 days of the date of presentation if the cheque bounces due to insufficient funds in the account.

By Esha Arora

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