Are you looking to know about cheque return reason list? If yes then you came to article.
In this article you get to know cheque return reason list. This article is written after referring more than 15 articles related to this topic.
CHEQUE BOUNCE/RETURN REASONS
There are many reasons for cheque bounce/return. They are date is incorrectly mentioned, funds insufficient in the bank account of the payer, signature mismatch, amount in words and figures differs etc.
Cheque return reasons are based on
Funds,
Reference to Drawer,
Signature,
Stop Payment by drawer,
Based on Instruments,
Based on Account,
Based on Crossing/Endorsement,
Based on RBI/Government,
Other Miscellaneous reasons.
Cheque return reason divided into 9 types. Cheque return reason number 1-3 is based on Funds.
FUNDS INSUFFICIENT (CODE NO 1)
Funds Insufficient is the cheque return reason number 1.
If cheque bounces for a reason funds insufficient it means that in drawer account not having sufficient balance to pass the cheque. It’s one of the most common reasons of cheque return. In this the person (Drawer) not having sufficient balance in his/her account to cover the cheque amount which came in clearing for payment. This this bank cannot able to process the payment and Payee of the cheque does not get any amount.
EXCEEDS ARRANGEMENT (CODE NO 2)
Exceeds arrangement is the cheque return reason number 2.
This cheque return reason arise in case of Overdraft or Cash Credit account where customer fully utilized the balance in their account. In simple words customer not having sufficient amount in their overdraft/cash credit account to pass the cheque.
EFFECTS NOT CLEARED, PRESENT AGAIN (CODE NO 3):
Effects not cleared, present again is the cheque return reason number 3.
In simple words it means please present again in few cases drawer indicates that funds expected to be credited to drawers account shortly.
Cheque return reason 4-5 based on Reference to Drawer.
REFER TO DRAWER (CODE NO 4):
Refer to drawer is the cheque return reason number 4.
In simple words it means any specific reason mentioned by the drawer to pay the cheque. Sometimes bank does not want to destroy the reputation of the drawer in view of the payee.
KINDLY CONTACT DRAWER/DRAWEE BANK AND PRESENT AGAIN IN CLEARING (CODE NO 5):
Kindly Contact Drawer/Drawee is the cheque return reason number 5. In simple words it means you need to contact Drawer/Drawee bank for any query regarding the cheque. After solving the query, you can present the cheque again.
Cheque return reason 10-17 based on Signature.
DRAWER’S SIGNATURE INCOMPLETE (CODE NO 10):
This reason code is 10. In this drawer did incomplete signature on the cheque.
DRAWER’S SIGNATURE ILLEGIBLE (CODE NO 11):
This reason cheque return reason no 11. In this drawer signature is mismatch or wrong signature or incomplete signature.
DRAWER’S SIGNATURE DIFFERS (CODE NO 12)
This is cheque return reason 12. In this drawer signature does not tally with signature provided in bank records.
DRAWER’S SIGNATURE REQUIRED (CODE NO 13)
This is cheque return reason no 13. In this drawer of the cheque not signed on the cheque.
DRAWER’S SIGNATURE NOT AS PER MANDATE (CODE NO 14)
This is cheque return reason no 14. In this drawer signature is different compared to mandate given in bank records.
DRAWER’S SIGNATURE TO OPERATE ACCOUNT NOT RECEIVED (CODE NO 15)
This is cheque return reason no 15. In this bank not received signature update from the drawer of the cheque.
DRAWER’S AUTHORITY TO OPERATE ACCOUNT NOT RECEIVED (CODE NO 16)
This is cheque return reason no 16. In this drawer did not provide any authority to bank to make any payments.
ALTERATION REQUIRES DRAWER’S AUTHENTICATION (CODE NO 17)
This is cheque return reason no 17. In this there is some alteration in cheque for that its required authentication by the drawer of the cheque.
Cheque return reason 20-25 based on Stop Payment.
PAYMENT STOPPED BY DRAWER (CODE NO 20)
This is cheque return reason no 20. In this drawer of the cheque informed the bank to stop making payment of the cheque. Bank will charge some fees to stop payment.
PAYMENT STOPPED BY ATTACHMENT ORDER (CODE NO 21)
This is cheque return reason no 21. In this case bank received attachment order from Government Department not to make any payment.
For Example: Income Tax Department attachment order to freeze the account.
PAYMENT STOPPED BY COURT ORDER (CODE NO 22)
This is cheque return reason no 22. In this case bank received court order, not to make any payment.
WITHDRAWAL STOPPED OWING TO DEATH OF ACCOUNT HOLDER (CODE NO 23)
This is cheque return reason no 23. In this when payee present to the cheque to the bank and in clearing process bank get to know the drawer account is closed due to death of the drawer. In this case bank will return the cheque with a reason ‘Withdrawal stopped owing to the death of account holder’
WITHDRAWAL STOPPED OWING TO LUNACY OF ACCOUNT HOLDER (CODE NO 24)
This is cheque return reason no 24. In this case when payee present the cheque to the bank, drawer not able to confirm the payment of the cheque due to lunacy of the account holder.
WITHDRAWAL STOPPED OWING TO INSOLVENCY OF ACCOUNT HOLDER (CODE NO 25)
This is cheque return reason no 25. In this case when payee present the cheque to the bank, drawer not able to pay the cheque amount due to insolvency of the account holder. Bank may return the cheque stating withdrawal stopped owing to insolvency of the account holder.
INSTRUMENT POSTDATED (CODE NO 30)
This is cheque return reason no 30. In simple words postdate cheque refers to future dated cheque. This cheque was created or signed for future date. The purpose of this cheque is funds are not withdrawn before the certain date. Another important point related to postdated cheque is its doesn’t make a surety of the payment.
For example:
Today’s date is 25.03.2023 but on cheque date is 31.03.2023 it is a post-dated cheque; it does not consider for making payments.
INSTRUMENT OUTDATED/STALE (CODE NO 31)
This is cheque return reason no 31. In simple words it means it means date written on the cheque already passed 3 months or 90 days and this cheque not valid for payment. In few cases outdated/stale cheque used as evidence.
For example:
Date written on cheque is 25.11.2022, present date is 25.03.2023. Date written on the cheque is already passed more than 3 months. This cheque is not valid for make any kind of payments.
INSTRUMENT UNDATED/ WITHOUT PROPER DATE (CODE NO. 32)
This is cheque return reason no. 32. In simple words it means it means no specific date is mentioned in the cheque or its undated cheque. In this payee need to check the cheque date in the instrument before giving for cheque collection.
CONCLUSION:
Dear reader in this article you get to know about cheque return reasons and cheque bounce is a criminal offence. The issuer of the cheque liable to pay the penalties. Hope you understood the things better. If you have any query regarding this article kindly comment below.