What are the consequences of a Bounced Cheque ?

In India, cheque bounce cases are very common financial problems and are considered to be a big penalty on behalf of the issuer. People must be well aware of the procedures while dealing with the cheques. The government does have introduced few norms and regulations that provide a bit of relief to the issuer in terms of bounced cheques. Timing and procedure are important for any bounced cheque case. There are a few new norms which the government has introduced. Let us have a look at few of them.

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• A bounced cheque case can only be filed in a court in whose jurisdiction the bank branch of the payee lies. This has been given according to the law.
• This new form of law will help a lot in ensuring a fair trial.
• Also the Negotiable Instrument Bill 2015 has been passed by the Parliament recently.
• This Negotiable Instrument Bill 2015 allows the cheque bounce cases at a place where the cheque was presented for clearance and not the place of issue.
• The law is also mandatory for centralization of cases against the same drawer.
• Once if a cheque gets dishonored, the drawee bank gives the banker of the drawer a “cheque return memo” which clearly states the reason for non-payment of the cheque.
• •Within 30 days of the memo being sent to the drawee, a legal notice is sent which states the details of the transaction.
• After receiving this notice the defaulter will have to pay the amount within the given specified duration of 30 days.
• However if the defaulter fails to pay the sum then the drawee of the cheque can file a complaint due to the expiry of a duration of 30 days.

According to the Negotiable Instruments Act, dishonoring a cheque is an offense under the Indian penal code. Even after the cheque is encashed a minimum amount of balance must be there in the account. Due to the presence of insufficient funds, the defaulter may have to pay a heavy penalty. However if for a customer the cheque bounce case occurs more frequently the RBI will not issue any further cheque- books to him. A bounced cheque can also affect the CIBIL score.  The drawer of the cheque can be prosecuted and the appropriate punishment may be handed out. Under the Negotiable Instruments Act, a criminal liability can be established. However if a dishonored cheque is drawn then the drawer may be jailed for 2 years or may also be fined. Thus a customer must be very careful with bounced cheques and must prevent any case of bounced cheque otherwise, he may face a financial problem.

Article by Anisha Dutta

She is a content evangelist who believes that the Science of today is the Technology of tomorrow. 
She can be reached at https://twitter.com/Anisha_Dutta29