What are the charges in case of a Cheque Bounce?

Last Updated at: May 04, 2020
Latest Update


On March, 2020

The Supreme Court has recently said that as per the amended Section 148 of the N.I. Act, the accused shall deposit 20% of the fine or compensation awarded by the trial court to appeal against the order in a cheque bounce case.

bounced cheque
News update: On February, 2020

The Supreme Court has recently said that as per the amended Section 148 of the N.I. Act, the accused shall deposit 20 per cent of the fine or compensation awarded by the trial court to appeal against the order in a cheque bounce case.


A cheque (check) becomes a bounced cheque when, on being presented to the bank, it is returned by the bank due to there being a defect in it. A cheque may bounce due to: a. Insufficient funds b. The amount mentioned in the cheque exceeding the amount which has been arranged to be drawn from the account by virtue of a prior arrangement.

When you issue a cheque and it is presented to the bank when there are insufficient funds in your account, it will be bounced. This happens because the amount in the cheque exceeds the amount in your bank account. Though this is a common situation, it will result in consequences such as penalty.

A common occurrence in the business world, a bounced can have terrible consequences for the drawee, should the drawer wish to press charges.

    Connect with Veteran Lawyers

    Free Consultation

    Cheque Bounce Notice

    In case you have deposited a cheque that has bounced, send a letter (a demand notice) to the party that wrote the cheque (the drawer), threatening to initiate proceedings under the Negotiable Instruments Act (NI Act) if the amount due is not paid.

    The threat of prosecution usually results in prompt settlement (if the drawer is an individual, the proceedings would happen under Section 138 of the NI Act. In case of a company, its managing director can be personally prosecuted under Section 141). The demand notice must be sent within 30 days from the date you found out that the cheque issued to you bounced. Its purpose is to demand payment and inform the issuer that he or she will be prosecuted if payment is not made within 15 days.

    Talk to Our Legal Experts

    It should contain the following information:
    1. Statement that you presented the cheque within its period of validity.
    2. Statement of debt or legally enforceable liability.
    3. Information about the reason of dishonour of cheque (check the memo of the bank returning the cheque for this).
    4. Calling upon the drawer to pay the amount due.
    5. Statement that you are giving the drawer 15 days to pay up or you will initiate legal action.

    Cheque Bounce Case

    A lawyer is not required to send this notice but you may get it vetted by a lawyer for a few hundred rupees. The notice often becomes the point of fierce battle when a dispute does reach trial.

    The proof of service of the notice is very important – you can courier it if pressed for time but also send a copy through registered post or speed post. If not pressed for time, just the speed post is enough. If it is the 15th day and no payment has still been received, you have to file a complaint within 30 days before a magistrate in any of the following scenarios. They are where the cheque was drawn; where the cheque was presented; where the cheque was returned by the bank; and where the demand notice was served by you.

    If during the validity of the cheque, after the demand notice has been sent, the drawer asks you to present the cheque again and it is yet again dishonoured, the drawer’s time limit under the demand notice does not increase. The dishonour of a cheque due to stopped payment is also covered under Section 138 of the NI Act. You cannot take legal recourse if the cheque was issued as a gift, donation, or any other obligation that is not legally enforceable or if the validity of cheque is over (issued more than three months ago).

    Civil and Criminal Charges for Cheque Bounce

    In case you do not file criminal charges against the issuer, he/she can get away with only a small fine paid to the bank for a bounced cheque. However, if you file a civil or criminal case against you, the NI Act, 1881 would apply.
    Section 138 of the Act states that any bounced cheque is punishable under the Act. And it can lead to up to two years of imprisonment, a monetary refund or both.

    Moreover, according to RBI guidelines, banks can stop issuing cheque book facilities to any customer booked for a bounced cheque. The minimum stipulated rate of offence is set as at least four times on cheques valued over Rs.1 crore.

    Bank Penalty

    If a cheque bounces due to insufficient funds or any other technical reason, such as signature mismatch, their respective banks charges for both the defaulter and the payee.

    The penalty charges for cheque outward return are close to Rs. 300 for most banks, while charges for cheque inward return are about Rs. 100.

    The penalty charges vary from one bank to another and are different for different account types. Premium accounts usually have higher penalty charges.

    Impact on CIBIL Score

    A bounced cheque can dent the financial credit history of a drawee. Even a single bounce case can impact your CIBIL score irreparably to an extent that you can possibly be denied a loan in the future.

    A CIBIL score is critical for your business since it can invariably affect your equation with the investors or the banks when you approach them for your loan.

    The best way to keep your CIBIL score healthy is to ensure your cheques are never dishonoured. Also, it is that you have significantly more funds than the minimum balance in your account after cheque encashment.

    There are, however, instances, when the cheque may have bounced due to:
    • Spelling errors
    • Mistakes in dates
    • Overwriting
    • Signature mismatch
    • Closed bank account
    • Low funds in the account (it will be a gross irresponsibility to issue a cheque if funds are low)
    • Disparity in the amount written in figure and words, and so on.

    Under such instances, as soon as the drawee receives the Cheque Return Memo, they can reissue the same within 30 days of intimation. This is to avoid criminal charges or any of the above offences. Any payments, not made within the stipulated time period (which is usually 15 days), will be deemed as an offence. And the payee can take you to the court to start criminal proceedings against the drawee of the cheque. The court gives a 30-day notice period to file the complaints. This happens in case they don’t receive fresh payments within a particular time. There are various reasons and cases involved in a cheque bounce. And whatever they may be, it is essential that one need to take care while issuing cheques.

    Free Consultation with our veteran lawyers

    It is better to be safe than sorry. Hence, ensure to write the cheques which you issue are legible and with clarity. And, in circumstances where the cheque bounce case/notice is issued, revert back with payments within the stipulated time.

    Cheque bounce charges in SBI bank:

    Cheque/bill deposited with the bank returned unpaid by others (Local/ Outstation)


    Cheque/bill up to Rs. 1 lakh Rs. 150/- + GST
    Cheque/bill above Rs. 1 lakh Rs. 250/- + GST

    Cheques drawn on SBI (for insufficient funds only)


    For all customers Rs. 500/- + GST, irrespective of the amount
    Cheque returned charges for Cheques drawn on SBI (for technical reasons) for all customers. Rs. 150/- + GST


    Cheque bounce charges in ICICI bank:

    Local cheque deposited by customer Rs.100 for every cheque return for financial reasons
    Cheque issued by customer Rs.350 for one cheque return per month; Thereafter, Rs.750 per return in the same month for financial reasons Rs.50 for non-financial reasons except for signature verification
    Transfer cheque returns will be charged at Rs. 350 per return for financial reasons
    Outstation cheque deposited by customer Rs.150 plus other bank charges at actuals per cheque


    Cheque bounce charges in HDFC bank:

    Cheque return charges drawn on us – Local Due to insufficient funds
    First cheque return in a quarter – Rs 350
    From the second cheque return in the same quarter – Rs 750 per return
    Charges due to funds transfer cheque return – Rs 350
    Due to technical reasons – Rs 50/-
    (ex. – Alteration not allowed, Amount in Word / Figures Required, Cheque Altered – Refer to Drawer, etc.)
    Cheques deposited returned unpaid Charge of Rs 100 per instance
    Stop payment charges (request from customer not to honour cheque issued) at Branches Particular cheque – Rs 100
    Range of cheques – Rs 200
    No Charge through PhoneBanking and NetBanking


    When should a business apply for multiple GST registrations?

    A business owner is eligible to apply for multiple GST registrations for the same entity if the business operates in more than one state or several verticals in a single state.

    What is a return of income?

    This is the term used by people who pay tax. It is nothing but the tax amount that is returned by the income tax department. More on Income Tax Return Filing.

    What is ISO Certification?

    ISO certification confirms that a manufacturing process, management system, documentation or service procedure has all the needs for the quality assurance and standardization. Learn more about ISO Certification.

    What is NGO ?

    An NGO is a Non Governmental Organization which works independent of the government for the betterment and welfare of the underprivileged section of the society. More info on NGO Registration in india.

    What is the purpose of registering your business under MSME?

    MSME stands for Micro, Small and Medium Enterprises. MSME Registration is not mandatory by the Government but is beneficial in terms of credit facilities, startup business, taxation, loans, etc. More about Udyog Aadhar Registration.