When cheque bounce

A cheque bounce, or dishonour, occurs when a bank refuses to process a cheque for payment. Common reasons include:

• Insufficient funds in the drawer's account
• Signature mismatch compared to bank records
• Incorrect or outdated dates (cheques are valid for three months)
• Mismatched amounts in words and figures
• Damaged or overwritten cheques

In India, a cheque bounce due to insufficient funds is a criminal offence under Section 138 of the Negotiable Instruments Act, potentially leading to imprisonment for up to two years, fines, and a damaged credit score.