Upset because a cheque bounced? Here’s what you can do

As we all know, cheque bounce can cause so many troubles for both - the payee and the drawer. There are a few things you can consider to avoid such problems.

What To Do If A Cheque Bounces

Identify the business, organisation or individual who had to cash the cheque and contact them immediately. It is important to communicate early if your cheque has bounced or if there is a possibility of the cheque bouncing to avoid any ill feelings or confusion that may arise.

Sometimes a cheque can be rejected by the payee bank on technical grounds - it could be a signature mismatch, an over-written date, a misspelt name or because the computer could not identify the digital signature. In that case, you can always issue another cheque. As a payee, you can communicate with the drawer about the rejection of the cheque by the branch and ask for them to sign a fresh one.  

If in case your cheque has been returned on account of insufficient funds, you could immediately ask the payee to represent the cheque in a few days time. If the payee doesn’t agree, then you may have to pay them in cash. Inform the recipient of your financial situation if you do not have it. You may be able to work out and set up a part-payment plan.

Repercussions Of Returned Cheques

The bank may take legal action against the issuer if the cheque bounces, since a bounced cheque is regarded in India as a criminal offence. It is highly advisable to check your funds before issuing a cheque to anyone. You might also be charged an overdraft fee, an insufficient funds fee or a returned cheque fee. To avoid this, make sure that you understand your bank's overdraft policy.

Your relationship with the recipient will also determine how much trouble you might face as a result of a bounced cheque. If such a situation arises, it is important to contact the recipient as soon as possible. Cheque bounces are criminal offences, so you might also be sued by the recipient of the cheque based on the amount dispensed and your previous records.

Also Read: Digital banking units across rural areas is India’s big push for Financial Inclusion

How Can Bounced Cheques Be Avoided?

If your bank offers an overdraft protection facility, you can transfer funds from other accounts linked to it to cover the overdraft. Contact your bank for more information.

It is important to check the balance in your account before signing a cheque for a recipient. 

Keep these points in mind to avoid cheque bounce and their repercussions so that you steer clear of any legal problems that may arise later.