What Are Cheque Bounce Charges? Meaning, Rule, and More

Cheque bounce charges are a penalty amount that you must pay when the cheque fails to provide the promised amount. When you make a cheque, it is an agreement to pay the mentioned sum bound by the law. 

If a payee presents a cheque and the bank doesn’t make the payment, citing the reason of insufficient funds, it’s called a ‘dishonoured’ or ‘bounced’ cheque. This punishable offence leads to a fine or imprisonment based on the circumstances. 

To know what is the charge for cheque bounce in some of the top banks, read on.

Cheque Bounce Penalty and Punishments in India

When a bank dishonours a cheque, it is a punishable offence as per the Negotiable Instruments Act of 1881. You may have to face one of the following penalties.

• A fine of twice the cheque’s amount
• 2 years of imprisonment
• Maybe both, depending on the court’s order 

Hence, you must maintain the required balance before issuing the cheque. The RBI also issued a notice in August 2021 informing all customers to rely heavily on cheques for transactions to maintain a minimum bank balance.

Also Read: Cheque Bounce: All you need to know

Common Reasons for Cheque Bounce

Here are some crucial facts on why your cheque must have bounced:

• If your account does not have the required amount mentioned on the cheque
• If the payee presents the cheque after three months of its issuing date
• If the payee deposits it after the expiry date
• If there is overwriting on the cheque
• If the cheque is damaged and the details are not visible
• If the drawer’s signatures are unclear or mismatched
• If the amount written in digits and words does not match 
• If the cheque is post-dated
• If the bank has suspended the account

Cheque Bounce Charges of Top Banks

Here are the cheque bounce charges for both parties of a few leading banks in India:

Bank	Outward	Inward	Technical Reason
State Bank of India	Up to ₹10,000: ₹150Above ₹1 lakh: ₹250	For SME customers₹500 for first 3 cheques₹1,000 for 4th cheques For other customers₹500 + GST	₹150
ICICI Bank	₹200 for financial reasons	₹500 for financial reasons ₹50 for financial reasons	₹500 for NACH Returns
HDFC Bank	1st cheque – ₹4002nd cheque- ₹4503rd cheque onwards – ₹500	₹200 per instance	₹500 for NACH Returns₹50 for mismatched signs, post-dated, etc.
Kotak Mahindra Bank	1st cheque of month- ₹350 2nd cheque of the month onwards – ₹750	Indian currency: ₹200foreign currency: ₹1,000	₹50
Punjab National Bank	Up to ₹1 lakh: ₹150₹1 lakh to ₹10 lakhs: ₹250₹10 Lakh onwards: ₹500	Up to ₹1 lakh: ₹200₹1 lakh to ₹1 crores: ₹500 ₹1 crores: ₹2,000 for 1st cheque, ₹2,500 for 2nd cheque onwards	Nil
Axis Bank	₹500 per instance	₹500 per instance	₹500 per instance

Note that all these charges are exclusive of GST and other taxes applicable. Also, these fees may vary at the discretion of the bank.

Now that you know cheque bounce penalty charges, avoid instances of cheque return. One way to manage such situations is to get a Instant Personal Loan if you have an insufficient balance. 

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FAQs on Cheque Bounce Charges

How much does the bank charge for bounced cheques?

Here’s what you need to know:

• The cheque bounce charges vary from one bank to another
• It depends on the bank whether it’s an inward or outward deposit

What is the new rule for cheque bounce?

RBI issued the latest cheque bounce notice in August of 2021, which states the following:

• All individuals must maintain sufficient balance for the cheque to avoid a penalty
• The National Automated Clearing House (NACH) will be operational 24X7 

How can I avoid paying a cheque bounce charge?

Follow the given precautions to avoid cheque bounce charges:

• Maintain sufficient account balance
• Verify the information on the cheque
• Avoid issuing post-dated cheques without sufficient balance
• Communicate with the recipient 
• Avoid overwriting cheques
• Write the amount in words and figures accurately
• Ensure there’s no mismatch between the amount in words and figures
• Avoid making any mistakes when signing the cheque

Can I file a FIR for cheque bounce?

Yes. Here’s what you must know:

• You can file an FIR against the issuer 
• You can file it under Section 420 or 406 of the Indian Penal Code (IPC)

How many times can a cheque bounce?

Know these vital facts:

• According to the RBI guidelines, a bank must give three cautionary notices to the account holder in case of a cheque bounce
• On the fourth occasion of a cheque bounce, banks can stop the cheque facility or close the account as per their policy