Tax Finance Info: Cheque Return

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Cheque Return/Bounce: What are the reasons for cheque return or bounce?</h3>
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<br /><span style="text-align: justify;">First, let us
understand what the cheque is? Cheque is an order in written format given for
paying money from Bank Account. This service is provided by bankers to their
customers having their accounts with the bank. The cheque is a document and
looks as follows:</span><br />
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<span lang="EN-US"><br /></span></div>
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<b>There are four most important
fields in the cheque, they are:</b></div>
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<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">        
</span></span><span lang="EN-US">Drawer               :
Who writes the cheque<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">        
</span></span><span lang="EN-US">Drawee              :
Bank to whom an order in  given for
paying  money<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">        
</span></span><span lang="EN-US">Payee                 :
A person to whom money is to be paid<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">        
</span></span><span lang="EN-US">Amount              :
Amount to be paid.<o:p></o:p></span></div>
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<span lang="EN-US"><span style="font-size: large;"><b><u>Whole procedure for paying with
a cheque is:</u></b></span><o:p></o:p></span></div>
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<span lang="EN-US"><o:p></o:p></span></div>
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<span lang="EN-US">The cheque is to be written very
clearly. Many a times if the Drawer fails to follow the terms and conditions of
payment by cheque, the cheque may be dishonored or returned by the bank.
Dishonor simply means that the Bank will not honor/ accept your cheque and the
payment will not be transferred from the drawers Account to the Payee’s
Account.<o:p></o:p></span></div>
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<span lang="EN-US"><u><span style="font-size: large;"><b>The reasons of dishonor / return
of cheque are as follows:</b></span></u><o:p></o:p></span></div>
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<b><span lang="EN-US"><br /></span></b></div>
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<b><span lang="EN-US"><span style="font-size: large;">Insufficient Funds:</span><o:p></o:p></span></b></div>
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<span lang="EN-US">The
first and foremost reason for the dishonor of the cheque can be lack of
sufficient fund in the bank account of the drawer. Proper care should be taken
every time paying someone by way of cheque that you have enough balance in your
account to meet the cheque amount.<o:p></o:p></span></div>
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<b><span lang="EN-US"><span style="font-size: large;">Clerical Mistakes:</span><o:p></o:p></span></b></div>
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<span lang="EN-US">Many
a time’s people may make clerical mistakes in writing a cheque which may result
in dishonor of cheque by the banks. Clerical Mistakes can be as follows:<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";">      -<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Signature: </span></b><span lang="EN-US">The signature of the
drawer should be perfect and must be same every time. Still they may commit
some error by mistake which are as follows:<b><o:p></o:p></b></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Signature Different from the one provided to the bank<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Signature not done<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Signature incomplete<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Signature unreadable etc<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Other Mistakes/Frauds:
</span></b><span lang="EN-US"><o:p></o:p></span></div>
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<b><span lang="EN-US"><br /></span></b></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Payee name unreadable<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Payee Account not found<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Drawer Account not found<o:p></o:p></span></div>
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<b><span lang="EN-US"><span style="font-size: large;">Other Mistakes:</span><o:p></o:p></span></b></div>
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<b><span lang="EN-US"><br /></span></b></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Expired Cheque: </span></b><span lang="EN-US">The cheque is valid
for Three Months from its date. The date may have lapsed.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Payment Stopped by
the Drawer: </span></b><span lang="EN-US">Drawer<b> </b>may stop payment in case where he comes
to know anything ambiguous.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Payment stopped by
any other authority:</span></b><span lang="EN-US"> such as Government, Court etc.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">In case where the cheque amount is to be paid from the
overdraft account, if the amount of cheque is more than the amount that can be
withdrawn by the drawer, then also Bank dishonors the Cheque.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">When the Account is closed and after that the Payee deposits
such cheque for clearance.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">When the Account of the drawer id blocked temporarily or
permanently in case the documents required for maintaining the account is not
submitted by the drawer.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -18pt;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">When the Drawer gives post dated cheque and the payee
deposits it before the same.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">Many a times the cheque is bearing no date such cheque are
also dishonored.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">Cheque may be dishonored when the Drawer is proved
insolvent.</span></div>
<br />
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">When the drawer or any other person makes any changes in the
details once filled in the cheque, such alteration requires to be signed again
by the drawer. If the same is not complied with the cheque is returned.</span></div>
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Cheque Return/Bounce: What are the reasons for cheque return or bounce?

Cheque Return/Bounce: What are the reasons for cheque return or bounce? First, let us understand what the cheque is? Cheque is an orde...

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