Cheques are a common method of payment in banking, but sometimes they don’t go through as expected. This is known as a “cheque bounce” or “cheque return.” It happens when the bank cannot process the cheque due to various reasons. Here’s a simple explanation of the most common reasons why this happens:
1. Not Enough Money in Account
The account doesn’t have sufficient balance to clear the cheque amount.
2. Closed Account
The account has been permanently closed by the bank or the customer.
3. Signature Doesn’t Match
The signature on the cheque is different from the one recorded with the bank.
4. Cheque Dated for Future
If the cheque is presented before the date written on it, it gets rejected.
5. Old Cheque (Stale Cheque)
Cheques older than 3 months from the written date are considered expired.
6. Payment Stopped by Issuer
The person who wrote the cheque has asked the bank to stop the payment.
7. Signature Looks Unusual
The signature is slightly off or unclear, causing doubt for the bank.
8. Mismatch in Words and Numbers
If the amount in words and figures is not the same, the cheque is returned.
9. Corrections Without Sign
Any changes on the cheque without proper signature next to the correction lead to rejection.
10. Damaged or Torn Cheque
A cheque that is torn, dirty, or unreadable won’t be accepted.
11. Cheque Not Presented in Time
If the cheque is submitted after 3 months of issue, it becomes invalid.
12. Signature Missing
If the cheque is unsigned or has an incomplete signature, it gets bounced.
13. Amount More Than Limit
The cheque amount is more than the available limit, such as an overdraft limit.
14. Legal Hold on Account
Payment is blocked due to a court case or legal order.
15. Refer to Drawer
A vague reason when the bank finds something wrong but doesn’t mention it clearly. Usually, the drawer (issuer) needs to be contacted.
16. Issuer Passed Away
If the person who issued the cheque has died, the cheque becomes invalid.
17. Wrong Date Format
If the date is written incorrectly or in an unclear format, the cheque is not processed.
18. Details Missing
If important fields like date, amount, or payee name are blank, the cheque is incomplete.
19. Wrong Branch
If the cheque is presented at a branch where it can’t be processed, especially in case of local cheques.
20. Unreadable Account Number
If the account number is not clearly written or incorrect, the cheque gets returned.
21. Limit on Withdrawals Exceeded
Some accounts have a withdrawal limit. If the cheque crosses that limit, it can’t be processed.
22. Suspicious Activity in Account
If the bank finds an unusual transaction pattern, it may stop the cheque for safety reasons.
23. Account Frozen by Authorities
If the account is frozen by RBI or government agencies, no transactions are allowed.
24. Crossed Cheque Presented for Cash
A crossed cheque must be deposited in a bank account and cannot be cashed at the counter.
25. Signature Not as per Joint Account Rule
If a joint account requires two signatures and only one is there, the cheque will not clear.
26. No Longer Authorized Signatory
If the person signing the cheque no longer has authority on the account (e.g., in a company), the cheque gets rejected.
27. Payee Name Not Clear
If the name of the receiver is unclear or wrongly written, the cheque may be bounced.
28. Court Orders Blocking Account
A garnishee order or similar legal instruction can block payments from the account.
29. Dormant or Inactive Account
If the account has had no activity for a long time, it is marked dormant and may not allow cheque transactions.
30. Wrong Type of Cheque Used
If a non-MICR cheque is used in a MICR-only clearing zone, it gets rejected.
Understanding these reasons can help avoid problems with cheque payments. Always double-check before issuing a cheque to ensure it is filled correctly and all conditions are met.
