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What does cheque return mean
Cheque return refers to a cheque being sent back unpaid by the bank on which it is drawn, instead of being processed and credited to the payee. This happens when the drawee bank cannot honour the cheque for a specific reason, such as insufficient funds, an expired cheque, or incorrect details. Every returned cheque comes with an official reason code and description, stated on a return memo, so the payee and the bank know exactly why the cheque was not processed.
Cheque return vs cheque bounce: are they the same term
Yes, "cheque return" and "cheque bounce" are generally used to mean the same thing in everyday language, both referring to a cheque that has not been honoured by the bank. "Cheque return" is the more formal, technical term used in banking documentation and return memos, while "cheque bounce" is the commonly used everyday phrase. You may come across either term depending on whether you are reading a bank notice or discussing the situation casually. Regardless of the term used, the underlying meaning and consequences remain the same.
Where does the reason for return appear
When a cheque is returned, the drawee bank issues a return memo along with the unpaid cheque. This memo includes a specific reason code and a short description explaining why the cheque could not be processed. These codes follow a standardised list set out under the Uniform Regulations and Rules for Bankers' Clearing Houses (URRBCH), so the reason is described consistently across banks, regardless of where the cheque was presented. You can find this reason clearly stated on the return memo itself.
Common cheque return reason codes and their meaning
While the exact wording and numbering can vary slightly by bank, some of the most common reasons for cheque return include:
| Reason (as commonly stated) | What it means |
|---|---|
| Funds insufficient | There is not enough balance in the drawer's account to honour the cheque |
| Exceeds arrangement | The cheque amount is higher than the approved limit, typically for overdraft accounts |
| Signature differs or incomplete | The signature on the cheque does not match the bank's records |
| Instrument post-dated | The cheque is dated for a future date and cannot yet be processed |
| Instrument out-dated or stale | The cheque has been presented after its three-month validity period |
| Amount in words and figures differs | The amount written in words does not match the amount written in figures |
| Stop payment | The drawer has instructed the bank to stop payment on the cheque |
| Other reason | Used for situations not covered by the standard list of reasons |
For the complete, official list, refer to your bank's cheque return policy or the return memo accompanying your specific cheque.
Fault-based vs no-fault cheque return reasons
Not every cheque return is treated the same way by banks when it comes to charges. Some reasons, such as insufficient funds or a signature mismatch, are considered the customer's fault, and a return fee is typically applied. Other reasons, such as a technical issue on the bank's end or an error unrelated to the drawer's account, are considered no-fault returns, and banks are generally expected not to charge a fee in these cases. Understanding which category applies to your situation can help you know whether a return fee is appropriate.
Legal Warning: Section 138 and Your Repayment Obligations
A cheque return due to insufficient funds or other reasons can lead to legal action under Section 138 of the Negotiable Instruments Act. Here are the key implications:
- Legal Notice: The payee can issue a legal notice to the drawer of the cheque within 30 days of the cheque being returned.
- Penalty and Fine: If the issue is not resolved within 15 days of the notice, the drawer may face legal penalties, including fines.
- Imprisonment: In extreme cases, the court may impose imprisonment for up to two years.
Act now: Ensure you make the required payment immediately to avoid legal complications.
Why you must pay your overdue EMI immediately to avoid legal action
Failing to address a returned cheque can have severe consequences, including:
- Legal Notices: Non-payment can lead to legal notices and potential court proceedings.
- Higher Financial Burden: Additional penalties and interest charges can increase your financial liability.
- Credit Score Damage: A returned cheque negatively impacts your CIBIL score, reducing your chances of securing loans in the future.
Take action now: Pay your overdue EMI immediately to avoid these complications and secure your financial well-being.
Know more: How to complain
Related Banking, Payment and Financial Service Guides
Frequently Asked Questions
Cheque Return Basics
Charges & Consequences
Legal & Dispute Resolution
What is a cheque return memo and what information does it contain?
A cheque return memo is a document issued by the bank when a cheque cannot be processed. It contains details such as the reason for cheque return, cheque information, date of return, and bank remarks. It helps the account holder understand why the transaction was unsuccessful.
What is the difference between a cheque bounce and a cheque return?
Cheque return is a broader term used when a cheque is rejected for any reason. Cheque bounce usually refers to cases where a cheque is dishonoured, commonly due to insufficient funds. All cheque bounces are cheque returns, but not every cheque return is due to insufficient balance.
What is a cheque return memo and what information does it contain?
A cheque return memo is a document issued by the bank when a cheque cannot be processed. It contains details such as the reason for cheque return, cheque information, date of return, and bank remarks. It helps the account holder understand why the transaction was unsuccessful.
What are the cheque return charges in India?
Cheque return charges in India vary depending on the bank, account type, and reason for return. Banks may charge a fee when a cheque is rejected due to insufficient balance, incorrect details, or other reasons. Check your bank’s latest schedule of charges for exact information.
Will a cheque return message from my bank instantly lower my CIBIL score?
Yes, a cheque return message can negatively impact your CIBIL score, especially if it is related to EMI payments. Address the issue promptly to minimise the damage.
What is the penalty fee for a cheque return message on a Bajaj Finance EMI?
The penalty fee for a cheque return on a Bajaj Finance EMI depends on the terms and conditions of your agreement. Check your loan agreement or contact customer support for details.
What are the specific cheque return reasons with meaning that lead to legal notices?
Reasons such as insufficient funds, signature mismatch, or “Advice Not Received” can lead to legal notices if not resolved promptly.
Can I dispute a cheque return memo if my account had sufficient balance?
Yes, you can dispute the cheque return memo by contacting your bank and providing evidence of sufficient funds in your account at the time of cheque presentation.
How long does a bank have to return a dishonoured cheque?
The time taken to return a dishonoured cheque depends on the bank’s processing timelines and clearing system. Once a cheque cannot be processed, the bank informs the customer and provides a cheque return memo explaining the reason for rejection.
Is an advice not received cheque return considered a criminal offense under Section 138?
No, “Advice Not Received” is not typically considered a criminal offence under Section 138. However, it is essential to resolve the issue promptly to avoid complications.
