Cheque Return Codes: What They Mean for Your Loan

A cheque return isn't one single problem, it's a family of specific, coded reasons, from insufficient funds to a mismatched signature to a simple date error, and the correct fix depends entirely on which one actually applies to you.

• The return code tells you exactly what went wrong, so check it before assuming. A stale cheque, a signature mismatch, and insufficient funds all need completely different fixes, don't guess when the memo already tells you
• You shouldn't be charged if the return wasn't your fault. RBI specifically prohibits banks from levying return charges for technical issues you didn't cause, if you're charged anyway, that's worth querying directly
• A returned EMI cheque doesn't mean your loan is instantly in serious trouble. It doesn't automatically trigger a Section 138 case or an NPA classification, but the EMI does remain genuinely unpaid until you settle it another way
• A replacement payment doesn't automatically mean you're fully caught up. Check that the new payment actually cleared the full outstanding amount, not just the original cheque value, before assuming your account is regularised

If your cheque deposit is returned, check the exact return code on the memo first, that tells you whether the fix is on your end or the drawer's, and if it relates to a loan EMI, pay through an accepted method promptly rather than waiting for a second attempt with the same cheque.

Cheque deposit return means a cheque deposited into your account was returned without being successfully cleared. The transaction description indicates that the deposited cheque was returned, while the return memo provides the reason for non-payment. A cheque can be returned because of an issue with the drawer's account, the cheque itself, or the clearing process. The reason code helps identify whether the issue needs to be corrected by the cheque issuer, the presenting customer, or the bank.

For example, a return may relate to:

• Insufficient funds in the issuer's account
• A signature that does not match the bank's records
• A post-dated or stale cheque
• An account that has been closed
• Payment being stopped by the drawer
• Incorrect or incomplete cheque details
• An unclear cheque image or other technical issue

RBI directions require banks to indicate the return reason on the return memo or objection slip when a cheque is dishonoured.

What are the common cheque return reason codes?

Cheque return reason codes identify why a cheque was not honoured and help determine the appropriate next step. NPCI's CTS procedural guidelines contain standard return codes covering funds, signatures, stop-payment instructions, instrument-related issues, and account-related reasons.

The complete return-code list contains additional codes, so the exact code on the return memo should be checked before deciding what action to take.

How Cheque Return Reasons Affect Your Loan Account

A returned cheque used for loan payment can affect your loan account if the payment is not successfully realised. The impact depends on the reason for the return and whether the resulting unpaid EMI is cleared promptly.

• EMI remains unpaid: A cheque return does not complete the loan payment. The EMI remains due until the payment is successfully realised or paid through an accepted method.
• Overdue amount may continue: If the returned cheque relates to a due EMI and no replacement payment is made, the unpaid amount may continue to show as overdue in the loan account.
• Applicable charges may arise: A cheque return or unpaid EMI may attract applicable charges under the relevant loan terms and authorised schedule of charges. The exact charges depend on the applicable terms.
• Corrective action depends on the reason: The next step varies according to the return reason. You may need to arrange sufficient funds, correct cheque details, or make the payment through another accepted method.
• Credit reporting may be affected: Continued non-payment may be reflected in payment information reported for the loan account, subject to applicable credit reporting requirements.
• Account may not be regularised automatically: Making a partial or replacement payment does not necessarily mean the account is regularised. Check whether the unpaid EMI and any applicable dues have been fully cleared.

Addressing a returned cheque promptly can help prevent the related EMI from remaining unpaid for longer. Keep the cheque return details and payment confirmation to verify that the amount has been correctly credited to your loan account.

Returned cheque charges vary depending on the bank, account type, and reason for the return. Customers should check the applicable schedule of charges rather than assume a fixed amount, as charges may differ across banks and circumstances.

Key points to consider:

• Bank-specific charges: The applicable charge depends on the bank, account type, and reason for the cheque return. Check the bank’s authorised schedule of charges for the exact amount.
• Customer responsibility: A charge may apply when the customer is responsible for the cheque being returned.
• No charge where the customer is not at fault: RBI states that cheque return charges should not be levied when the customer is not responsible for the return.
• Technical return: If a technical issue causes the cheque to be returned, check the return reason. Contact the bank if a charge has been applied despite the customer not being at fault.
• Re-presentation of technical returns: Banks are required to have procedures for handling technical return cheques and their re-presentation.
• Loan payment: If a cheque intended for loan payment is returned and the EMI remains unpaid, a separate charge may apply under the applicable loan terms. Check the loan agreement and authorised schedule of charges for the exact amount.

Checking the return reason and applicable charge schedule can help you understand why a charge was applied and whether it is valid. For loan payments, address any resulting unpaid EMI promptly and retain the payment and return records for future reference.

What should you do after receiving a cheque deposit return message?

After receiving a cheque deposit return message, check the return reason, resolve the underlying issue, and arrange the payment again if the amount remains due.

Follow these steps:

1. Check the return memo: Identify the cheque number, date, amount, and specific return reason or code.
2. Confirm whether the cheque was yours or deposited by you: A cheque deposit return generally relates to a cheque deposited into an account, but the exact transaction context should be verified from the statement.
3. Resolve the reason for return: For example, the drawer may need to correct insufficient funds, provide a valid signature, or issue a replacement cheque.
4. Check applicable charges: Review the bank's current schedule of charges and your loan terms, where relevant.
5. Arrange payment again: If the cheque was intended to pay a loan EMI or other outstanding amount, use an accepted payment method rather than assuming the returned cheque has settled the dues.
6. Keep the records: Retain the return memo, bank communication, and proof of any subsequent payment.
7. Follow up if the return appears incorrect: Contact the relevant bank and raise a complaint if the return reason or charge does not appear accurate.

For a Bajaj Finance loan, borrowers can use the Bajaj Finance App or My Account portal to check available loan-related services and raise a service request where the relevant option is available. Sign in using the registered mobile number and OTP, open My Relations, select Loans, go to Help & Support, and choose Raise Request where applicable.

Does a cheque return affect CIBIL or loan payment?

A returned cheque does not by itself mean that your CIBIL score will automatically fall, but an unpaid loan EMI can affect the payment history reported for the loan account. If a cheque intended for an EMI is returned and the EMI remains unpaid, the resulting overdue status may affect the borrower’s credit record. The priority should be to resolve the unpaid amount promptly and confirm that the replacement payment has been successfully received and reflected in the loan account. Repeated payment failures may also result in applicable charges under the relevant loan terms. However, a cheque return should not be treated as proof that the loan account has been classified as an NPA or that legal action will automatically follow. Such outcomes depend on the circumstances, the duration of the overdue amount, and applicable rules. Borrowers should therefore check their loan account regularly, address unpaid EMIs promptly and retain payment confirmations and relevant records for reference.