Are you issuing a cheque without sufficient balance in your bank accounts? Beware of cheque bounce that may haunt you forever!
You are financially sound and also maintaining properly whether its business or banks accounts. Despite this, you felt 1000 volts shock when you notice your CIBIL Score is not good at all. Furthermore, you found that the reason for a poor CIBIL score is due to a bounced cheque.
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It will be a disaster if your cheque bounced whether knowingly or unintended. In fact, cheque bounce issue may push you behind bars as it is an offense in India.
Other than insufficient funds, cheque bounce can happen in the case mismatch of your signature on cheque as per the bank’s records.
Overwriting on your cheques without authentication and issuance of cheques that have expired validity are also reasons for cheque bounce.
You can check out some of the facts behind cheque bounce which will haunt you forever.
Behind Bars – Accuse of Criminal & Civil
The party whom you have issued a cheque and it gets bounced then he can file a charge against you as you have issued the cheque.
You may be prosecuted under Section 138 of Negotiable Instruments Act, 1882 or Section 417 and 420 of the IPC 1960 (Indian Penal Code).
In case the court finds you guilty, then you have to pay a fine twice the cheque amount and also you may have to face two years of prison terms. Furthermore, under Section 417 and 420, a non-bailable warrant may also be issued against you.
If you have issued more than one cheque and all the cheque gets bounced, then say “All is Well”. In that case, the payee may file a case against the second bounced cheque, and it will be a nightmare for you.
CIBIL Score Impact On Cheque Bounce
A cheque bounce can negatively impact your reputation with banks and so your score may degrade with CIBIL.
Your loan approval depends on your CIBIL Score and your loan application may get rejected due to low CIBIL Scire.
So, make sure your cheques never get bounced and your loan approval doesn’t get rejected. Even after the cheque is cleared, keep your account balance above minimum balance.
Bank Penalty On Cheque Bounce
Bank will charge you and whom you have issued the cheque in case cheque get bounced. It may happen due to insufficient funds in your accounts or any other technical reason like a signature mismatch.
If the bounced cheque is against the repayment of any loan, you would have to additionally bear the late payment charges along with the penalty fee charges by the bank.
The exact penalty charges vary with banks and are different for different account types like in premium accounts usually have higher penalty charges.
If you repeatedly do the cheque bounce offense, then banks have the right to stop issue cheque facilities.
Furthermore, a bank may auto-debit your account and also issue a legal notice for any loan repayment cheque bounce.
So, kindly issue a cheque and don’t let it dishonored for any reason. In case you don’t have any cash left, then immediately inform the payee before he submits it to the bank.
Before issue, a cheque to somebody, make sure you have sufficient funds in your bank account.
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Published on: Nov 2, 2017