What are Bounced Cheque Charges?

7 May, 2025

Synopsis

• Cheques can bounce due to insufficient balance, overwriting, signature mismatch, etc.

• Banks may levy cheque bounce charges or penalties, which may be fixed or varied.

Despite the digital revolution in banking the usage of cheques remains prevalent. However, with the convenience of cheques comes the risk of bounced cheques, which can lead to financial and legal consequences. Understanding the charges associated with bounced cheques is important while conducting financial transactions. Let’s understand what a bounced cheque entails, the penalties associated with bounced cheques and the reasons a cheque may bounce.

Breaking down Bounced Cheques

In banking, a bounced cheque is a cheque that cannot be processed or honoured. A bounced cheque is also known as a dishonoured or returned cheque. Cheques typically bounce due to insufficient funds in the issuer's account, in which case the bank returns it to the recipient and charges a penalty. Bounced cheques can also lead to legal consequences.

Reasons For Cheque Bounce

Following are some common reasons for a cheque to bounce:

• Insufficient funds in the account.

• Frozen or closed account.

• Mismatched or incorrect signature.

• Post-dated cheques presented prematurely.

• Alterations or overwriting done on the cheque.

• Cheque presented after its validity period.

• Technical issues with processing the cheque.

• Stop payment instructions issued by the drawer.
  
  

Penalty On Check Bounce

Banks typically levy charges for every bounced cheque. These cheques return charges vary from bank to bank and can range from a few hundred rupees to a percentage of the cheque amount. It is essential to check with your bank for the latest applicable bounce cheque penalty charges.

Legal Recourse In Case Of Cheque Dishonour

If a cheque is dishonoured, legal proceedings can be initiated by the payee against the issuer under Section 138 of the Negotiable Instruments Act. The process typically involves a legal notice being sent to the issuer to pay the amount due within 15 days. If the issuer fails to make the payment within the stipulated timeframe, the payee can file a criminal complaint, which may lead to a monetary fine, a prison sentence or both.

Preventive Measures
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Here are some preventive measures that you can take to avoid charges for bounced cheque:

• Maintain Sufficient Funds

Ensure that you have sufficient funds in your account before issuing a cheque. Regularly monitor account balances and avoid overdrawn situations to prevent charges for bounced cheque due to insufficient funds.

• Use Electronic Payment Methods

Electronic payment methods such as NEFT, RTGS, and UPI offer a more secure and instant mode of transferring funds. Using electronic modes of payment can significantly reduce the risk of bounced cheques.

• Prompt Action on Bounced Cheques

In case of a bounced cheque, you can take prompt action to resolve the issue. You should make the payment immediately upon being notified that a cheque has been dishonoured.

HDFC Bank Charges For Bounced Cheque:

• Cheque bounce because of insufficient funds – Returned in a month

1st time - ₹450 (Sr Citizen – ₹ 400)

2nd time - ₹500 (Sr Citizen – ₹ 450)

3rd time onwards - ₹550 (Sr Citizen – ₹ 500)

• In case of cheque bounce because of funds transfer:

₹350/- (Sr Citizen – ₹ 315)

• Cheque bounce because of technical reasons:

₹50/- (Sr Citizen – ₹ 45) (e.g. - Date not mentioned, sign mismatch, etc.)

Manage Payments Effortlessly With Your HDFC Bank Account.

While digital payments have simplified money transfers, you may be unable to avoid using cheques entirely. So, when you open an HDFC Bank account, we provide you a free cheque. The cheque book comprises an index section where you can note down the cheques issued and tally your account balance. This way, you can easily track and manage your finances.

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.