12 reasons for dishonour of cheque

12 reasons for Dishonour of Cheque

by Ankit Jaiswal on Banking, Basic Finance

Have you come across a situation where your cheque has been dishonoured?


Today I am going to discuss the reasons for dishonour of cheque.

Also Read: ‘Cheque’ de India

A cheque is said to be honoured, if the banks give the amount to the payee. While, if the bank refuses to pay the amount to the payee, the cheque is said to be dishonoured. In other words, dishonour of cheque is a condition in which bank refuses to pay the amount of cheque to the payee.

Whenever the cheque is dishonoured, the drawee bank instantly issues a ‘Cheque Return Memo’ to the payee banker specifying the reasons for dishonour. The payee banker provides the memo and the dishonoured cheque to the payee. The payee has an option to resubmit the cheque within three months of the date specified on the cheque after fulfilling the reason for the dishonour of cheque.

Moreover, the payee has to give a notice to the drawer within 30 days from the date of receiving “Cheque Return Memo” from the bank. The notice should state that the cheque amount will be paid to the payee within 15 days from the date of receipt of the notice by the drawer.

However, if the drawer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to conduct a legal proceeding against the defaulter as per Section 138 of the Negotiable Instruments Act.

7 Reasons for dishonour of cheque

Here are the reasons for dishonour of cheque-

  1. If the cheque is overwritten
  2. If the signature is absent or the signature in the cheque does not match with the specimen signature kept by the bank.
  3. If the name of the payee is absent or not clearly written.
  4. If the amount written in words and figures does not match with each other.
  5. If the account number is not mentioned clearly or is altogether absent.
  6. If the drawer orders the bank to stop payment on the cheque.
  7. If the court of law has given an order to the bank to stop payment on the cheque.
  8. If the drawer has closed the account before presenting the cheque.
  9. If the fund in the bank account is insufficient to meet the payment of the cheque.
  10.  If the bank receives the information regarding the death or lunacy or insolvency of the drawer.
  11.  If any alteration made on the cheque is not proved by the drawer by giving his/her signature.
  12.  If the date is not mentioned or written incorrectly or the date mentioned is of three months before.

To get a more clear understanding of the major reasons for dishonour of a cheque, you can watch the video below:

The Negotiable Instrument Act, 1881 is applicable for the cases related to dishonour of cheques. In accordance with section 138 of this act, dishonour of cheque is a criminal offence and is punishable with monetary penalty or imprisonment up to 2 years or both.

Keep the above points in mind while writing the cheque so that the cheque is not dishonoured.

Keep learning!!




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  • If the cheque presented for payment has both a signature mismatches and has no sufficient fund; how you right on the cheque returning slip? Could both reasons be written or what?

    • Hello Sleshi,

      Thank you for your comment

      Depending upon the internal regulations practiced by specific banks: multiple reasons can be written on the cheque return memo by using pre-determined codes(separated by a comma in case of multiple reasons)
      Usually, Code:1 represents insufficient funds while Code:13 represents Signature mismatch
      You can read: How to write a Cheque to get a better understanding of the proper manner of writing a cheque.
      Happy Reading!

  • If the cheque presented for payment has both a signature mismatches and has no sufficient fund; how you right on the cheque returning slip? Could both reasons be written or what?

  • Can you plz tell me the reason why we are debiting drawees a/c while the cheque gets dishonour….and plz tell the aspects of it

    • Hello Malvika
      The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

      In case of dishonour of cheque, in order to settle the account, Drawer’s bank is debited (drawee here but think it from the perspective of a creditor) and crediting payee who was a creditor for us to whom the payment was actually being made but a reverse entry is being passed as he hasn’t received a payment yet.

  • Sir I gave cheque without writting name and date one more thing I didn’t sign correct sign my friend nd he is dead now his brother came to home taking cheque ….and he is saying that Ur friend taking money by giving this cheque what to do sir…

  • If the ” stop payment” letter is given by payee to his bank without mentioning date,drawer name, or amount of the cheque and reason for stop payment.of that particular cheque.what is the legal deficiency in that letter if bank stops the payment onthe basis of above mentioned letter.

    • Hi Hemant,

      Thanks for writing us.

      If the payee gives stop payment order to the bank without mentioning the reason for the same, there is no legal deficiency in this regard. It’s upon the payee whether he may or may not mention the exact reason for such. In case, the other party asks bank about the reason for stop payment, the bank will answer as per the information received by them in this regard.

      In case of any further queries, feel free to write back

  • If a drawee forget to sign in a cheque which he issue to payee . My question is is that any amount will be deducted from the payee account. If yes then how much.

    • Hi,

      Thank you for the read. In case you have not signed on the cheque, it does not complete the cheque. Which means that your cheque has no validity. Hence, no amount of money can be withdrawn from your account by you or someone else until the cheque is signed by the account holder/ you in this case.

      In case of any further queries, feel free to write back.

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