Cheque bounce offences are punishable by up to two years in prison, a fine equal to twice the value of the check, or both.Read this blog to understand the ways of avoiding the costly cheque bounce penalty in India.
Cheque Bounce is one of the most prevalent financial offenses, which may hurt a person’s credit rating. Cheque bounce instances are many in India’s courts. Know How To Avoid Cheque Bounce Penalty.
There are several reasons why an issuer may write a faulty check, including technical issues like an incorrect match between the signature and the overwriting or a lack of money that prevents the bank from processing the Cheque Bounce Penalty. The check is then returned as unpaid or dishonored.
There are significant consequences for repeat offenders. Depending on the severity of the offence, the perpetrator might face a fine or perhaps incarceration.
There is a chance that your bank account could be closed or that the Cheque book service will be discontinued. Despite the Reserve Bank of India’s stated policy, such action may only be taken if checks worth more than ₹1 crore have bounced over four times.
What is a Cheque Bounce?
When a bank cannot process a cheque , it results in a Cheque Bounce Penalty. These are often the result of an error on the part of the payee.
The cheque might have been miswritten if the date or amount had been entered incorrectly. It does not matter how carefully you wrote your cheque; it will bounce if you do not have enough money in your account.
If the payee keeps the cheque for an excessive amount of time, the cheque will bounce. After the expiry date of a cheque, it is no longer valid. Once the cheque has become invalid, you cannot deposit or withdraw funds from a bank using it. So You Can Get Legal Cheque Bounce Help from Our Team of Experts.
Cheque Bounce Penalty- What Happens When A Cheque Bounce?
The term cheque bounce refers to a cheque that has been rejected due to insufficient funds or NSF. This signifies that the individual or corporation that wrote a cheque does not have enough money in their account to pay the Cheque Bounce Charges total amount.
A Cheque Bounce Case is a term that refers to a cheque that is submitted to your account but bounces because you do not have enough funds to pay it. As far as financial ‘boing’ this is the worst. One reason a cheque is bounced is that the bank cannot process the transaction. When a cheque does not clear due to one of the following reasons:
- As unusual as it is, your bank may mistakenly believe that you do not have enough money in the account to pay a cheque you have made
- An account has been terminated. If you have just moved banks, you may have forgotten that you still owe a cheque
- The deposit has been postponed. A person you wrote a cheque to kept it for a long time, and when you were short on money, they occurred to deposit it
- Some individuals send them in even if they do not have the money to cover the cheque . As a result, the people who receive the cheques are left without any money to cover their purchases
- Checking your balance and seeing more money accessible might indicate that you have forgotten to write down the transaction.
What Happens If Cheque Resulting in a Cheque Bounce Penalty?
It does not matter whether you write or deposit a bad cheque ; the consequences are always the same.
Charges Against You Both Legally and Criminally
If you write a bad cheque , you might face criminal penalties, which differ from state to state. Most states categorise bad cheque as misdemeanors, although the cheque amount might lead to felony Cheque Bounce Penalty. It is possible for the person who wrote a bad cheque to take you to civil court if you don’t make the lousy cheque right. You may have to pay penalties in addition to the cheque amount if the court deems you are accountable for paying the debt. Depending on the state’s laws, fines and liabilities might differ.
Anger And Uncertainty About The Future
Depositing a cheque that is not clear may be a frustrating experience, not to mention the costs your bank may impose. You may need to employ a lawyer or a collection agency to get the dishonored cheque remedy, which will cost you extra money. You may also lose the products you bought and the money you made from them.
Your company or family’s finances might be in jeopardy if you don’t get the selling proceeds. If you were relying on that income, you might be unable to keep up with your other financial responsibilities. A company owner’s worst fear is a string of bounced checks.
Providing Information To Consumers Reporting Agencies
If you write bad cheque regularly, you may be reported to companies which may harm your credit rating. Consumer reporting organisations notify retailers that accept cheque if a specific checking account or name is considered high risk.
In addition, you may discover that most stores no longer accept cheque as payment. In addition, since banks are required by law to provide information to these authorities, you may have trouble getting a bank account.
Cheque Bounce Penalty- Fees For Overdrafts And Non-Sufficient Funds
First, your bank will charge you an NSF fee, often an overdraft cost. Overdraft fees were more than ₹11 billion in the United States in 2019.
According to the Forbes Adviser 2020 regular bank fee study, the current average cost is ₹24.38, which might leave even more of a hole in the account if you’re short on money.
Online banks charge the average overdraft cost of just over ₹16 compared to traditional banks’ unions’ overdraft fees of just over ₹29 on average. To add insult to injury, you’ll be charged an overdraft fee when you deposit a faulty cheque .
If I Bank A Cheque And It Bounces, What Should I Do?
Take a breather and consider that your failed cheque is a mistake, even if it may be irritating. A little sympathy goes a long way when it comes to being compensated and avoiding costly Cheque Bounce Penalty other time-consuming processes.
Make contact with the person or business who issued the cheque. A phone call or email is OK, but log the interaction and explain the issue. If you cannot deposit the check, you’ll need to find another means to receive the money you’re due from the check writer.
Deposit the cheque back into your account. If the bank producing the cheque has a location near you, you may present the check during payment in person. If the cheque is rejected for a second time, you will not have to pay further costs to your bank. The online bank might be called to verify balances before posting the cheque again if it is drawn on to an account kept there.
Require payment with a letter. If the cheque doesn’t clear, send a note to the individual who wrote it and their bank describing the problem. Sending the letter certified mail ensures the receiver has signed for it upon arrival. Depending on your state’s legislation, you may be able to choose the due date of the check, which is typically 30 days. You may ask your bank for assistance with the specifics.
Take your case to a court of law. Taking the issuer into small claims is an option if everything else fails or the cheque stays unpaid. Make sure you know how much you may suit in small claims in your town and bring all of your evidence to demonstrate to the judge that you’ve tried in good faith to be paid.
However, even if someone ends up paying you in court, even if the judge decides in your favour, there is no assurance. In the end, you will have to weigh the cost of the solution against the quantity of the Cheque Bounce Penalty.
Conclusion
Legal professionals in India tend to work alone or in small firms with no more than five partners. Such procedures struggle to maintain track of their activities. Cheque Bounce Penalty refers to a cheque that has been rejected due to insufficient funds or NSF.
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