Tuesday, 9 March 2021

Cheque Bounce Penalty Charges levied by different Banks

 Cheque bounce has the potential of causing immense damage to the issuer of the cheque if the receiver wishes to sue him/her in the Court of law. Not only this, the banks even levy charges on the customers if the cheque is bounced. This article deals with the charges that are levied by the Banks in India, when a cheque is dishonored.


Charges Levied by Different Banks in India

As stated earlier, when a cheque bounces, the banks charge a fee. Both the defaulter and the payee could be charged by their respective banks. This fee is generally an NSF fee i.e. when there are insufficient funds in the account and the bank decides to bounce the cheque. Not all banks charge the same amount, the fee varies from one bank to another. The amount of this fee depends upon the reasons and nature of cheque bounce along with the type of account. This charge also attracts GST. Given below are the different cheque bounce charges as charged by different banks in India taken from their respective websites and platforms.


Cheque Bounce Charges for ICICI Bank

ICICI policy for charges for Cheque Bounce / Returns is as follows:

1. Local Cheque Deposited by Customer - Rs. 100 for every cheque returned for financial reasons

2. Cheque Issued by Customer - Rs.350 for one cheque return per month; Thereafter, Rs.750 per return in the same month for financial reasons,  Rs.50 for non-financial reasons except for signature verification. Transfer cheque returns will be charged at Rs. 350 per return for financial reasons.

3. Outstation cheque deposited by customer - Rs.150 plus other bank charges at actuals per cheque


Cheque Bounce Charges for SBI Bank

The charges of SBI are as follows:

A. Charges for Cheque or Bill deposited with the Bank returned unpaid by others (Local/Outstation)

Cheque/bill up to Rs. 1 Lakh - Rs. 150 + GST

Cheque/bill above Rs. 1 Lakh - Rs 250/- + GST

B. Charges for Cheques Drawn on SBI (for insufficient funds only)

For all customers - Rs. 500 + GST, irrespective of the amount

Cheque returned charges for Cheques drawn on SBI (for technical reasons) for all customers (Not to be charged where the customer is not at fault as per RBI guidelines) - Rs. 150 + GST


Cheque Bounce Charges for HDFC Bank

Cheque return charges drawn on HDFC Bank are as follows:

Due to insufficient funds (Local)- Rs. 350

Due to technical reasons (Local)- No charge

Non-maintenance of Average Quarterly Balance (Local)- Rs. 400

Cheque return charges drawn on HDFC deposited in other locations -Rs.75

Cheque deposited returned unpaid - Rs. 100 per instance would be levied


Cheque Bounce Charges for Punjab National Bank

In case of Punjab National Bank, the cheque return/bounce charges are dependant upon the amount stated on the cheque. The same has been given below:

A. Dishonour of cheques for want of funds or for any other reasons not attributable to PNB (Inward Clearing):

For cheques upto Rs. 100,000 - Rs. 300 per instrument

For cheques above Rs. 1 Lakh and upto Rs. 1 Crore - Rs. 500 per instrument (interest at the applicable rate for no. of days bank remained out of fund)

For cheques above Rs 1 Crore - Rs. 2000 for 1st cheque and Rs. 2500 per instance from 2nd cheque onwards during the month


B. Dishonour of cheques received by PNB Customers and deposited for presentation in the clearing house (Outward Clearing):

For cheques upto Rs. 1 Lakh- Rs. 100 per instrument

For cheques above Rs. 1 Lakh - Rs. 200 per instrument + out of pocket expenses if any


C. Local Cheques for presentation directly at the drawee bank - Rs. 100 + out of pocket expenses or 50% of collection charges whichever is higher


D. Local Bills for presentation directly at drawee bank/drawee - Rs. 200 + out of pocket expenses or 50% of collection charges whichever is higher


E. Returning Charges for Outstation Cheques/Bills

Cheques upto Rs. 1 Lakh - Rs. 100 per instrument + out of pocket expenses

Cheques above Rs. 1 Lakh - Rs. 200 per instrument + out of pocket expenses

Bills - Rs. 200 + out of pocket expenses or 50% of collection charges whichever is higher


F. Standing Instructions

Registration - Rs. 50

Execution - Rs. 35 + Remittance Charges + Out of pocket expenses

Non-Execution Charges (due to insufficiency of funds) -

Rs. 50 per transaction for non-individuals

Rs. 35 per transaction for individual customers of Semi-urban, Urban and Metro Branches

Rs. 35 per transaction for individual customers of Rural Branches, Sr. Citizens & Pensioners (Charges for Sr. Citizens & Pensioners are Irrespective of Location of Branch)


Negative Impacts of Cheque Bounce

1. CIBIL Score: Financial credit history is also affected and hampered when cheques are bounced. Even just one scenario of cheque bounce can negatively affect your CIBIL Score to an extent that you can be refused for a loan. So to ensure that the CIBIL score is active and up, you need to make sure that the cheques are never defiled and that the account possesses enough balance.

2. Other negatives: The RBI also states that a bank is allowed to restrict the issuing of a cheque bounce to a customer who has been or is repeatedly booked for cheque bounce offence. The maximum chances that can be offered to a customer for cheques more than Rs. 1 Crore. More than that, if any collateral security has been preserved with the bank for a loan and if the EMI cheque(s) bounces, the bank also has the right to issue a legal notice and can even deduct money from an active account that you may have.


Reasons and Penalties in Cheque Bounce

There are several reasons that can result in a cheque getting bounced or dishonoured. These are:

Insufficiency of funds

Presenting of cheque after 3 months

Overwriting or alterations in cheque

Mismatch of account number

Crossed Account

Closed Account

Death, insolvency or insanity of the customer

Stopping of payment

Mismatch of signature, etc.

However, for cheque bounce to be an offence under the Negotiable Instruments Act, 1881, the cheque must have been returned by the bank for the following reasons:

Insufficiency of funds in the bank account

The amount stated on the cheque exceeds the amount to be paid in agreement with the bank

Issuer of the cheque instructs the bank to stop the cheque payment



As stated earlier, punishment for cheque bounce is a criminal offence under The Negotiable Instruments Act, 1881 (Section 138):

Imprisonment upto 2 years

Fine which may be extended to double the amount on the cheque, or

Both of the above


Legal Remedies Available

If the cheque has been issued for the discharge of a debt or liability and was submitted to the bank within 3 months from when it was issued/drawn, and if this cheque has been bounced, one should send a legal notice (to the issuer) demanding the amount to be paid to the receiver of the cheque. Even if after the notice has been sent to the issuer, he/she fails to pay the amount, the payee/receiver of the cheque should file a complaint in a Court of appropriate jurisdiction with the help of a cheque bounce lawyer within a stipulated time period of 30 days.

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