In today's modern era, the UPI medium has brought a revolution in the transaction of money, but an ancient method of transaction has been used for many years through checks. But one thing that often haunts people is that if a check bounces, it can result in a penalty or more than that, let's know in detail what happens when a check bounces, what penalties can be applied and what are the legal steps involved.

Consequences of check bouncing

When a check bounces, a penalty is imposed on the person who issued it. The bank usually charges a fee for the bounced check, and the amount can be deducted from the account as a penalty.

If the check bounces, the creditor must notify the debtor, who has a month to pay. If payment is not made within that time frame, the creditor can send a legal notice.

Legal consequences and penalties

Fine up to twice the amount of the bounced cheque

Imprisonment up to 2 years, or both fine and imprisonment

The debtor will have to pay the outstanding amount along with applicable interest and penalty. The case will be filed in the jurisdiction of the residence of the creditor.

Fees related to cheque bouncing

Rs 350 per cheque bounced (if only one cheque bounces in a month)

Rs 750 if two cheques bounce due to insufficient funds in the same month

Rs 50 is charged if the cheque bounces due to reasons other than signature verification or insufficient funds.