What is cheque bounce

A cheque bounce, or dishonour of cheque, occurs when a bank refuses to process a cheque and returns it unpaid. This typically happens due to:

• Insufficient funds in the drawer's account
• Signature mismatch or unclear signing
• Mismatch between the amount written in words and figures
• Stale or expired date (older than three months)
• Physical damage to the cheque

In India, a cheque bounce due to insufficient funds is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, which can lead to bank penalties, negative credit scores, or legal action including fines and imprisonment.