Cheque Bounce Penalty in India

Posted On : November 23, 2022
Cheque Bounce Penalty in India
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People often do not have any idea as to what happens if cheque bounces in India? Such doubts often lead to unwelcomed threats of cheque bounce punishment in India. But doubts need to be cleared sooner than later to avoid losses and maintain a valid action in the court of law. Cheque bounce police complaint is a mis-conception since police do not entertain these matters. One has to go directly to the Magistrate to complain against a cheque dishonoured due to insufficiency of funds in the drawer’s account. Hence, if someone is threatening you in the name of police and prison for a bounced cheque, you should know that repayment can solve it for you. If you lack any means to repay, just do not avoid the legal process by running away from the cheque bounce penalty and prove before the court your genuine version. The new laws for cheque bounce are stricter than before and one has to be conscious.


Cheque Bounce Penalty in India

Dishonour of cheque is a financial wrong which may turn criminal if there is insufficiency of funds in the account of the person drawing the cheque (drawer). The answer to who pays cheque bounce charges depends upon whether it is a technical glitch, whereby parties need not bother. Otherwise, both drawer and payee need to bear the bank cheque bounce penalty. Apart from banks, the cheque bounce law also lays provisions of imprisonment and fine as explained below.


Cheque Bounce Punishment in India: NI Act, 1881

As per cheque bounce law under the Section 138 of Negotiable Instruments Act, 1881, lays imprisonment as well as fine if cheque bounce due to insufficient balance. The imprisonment may be extended to 2 years. It means that it is the discretion of the court dealing with the matter to punish the defaulter to an imprisonment of a few months or the wholesome 2 years. Apart from that, the amount of fine may extend to twice the amount of the cheque, again as per court’s discretion. Court may also pronounce the cheque bounce penalty as both imprisonment and fine, as deemed fit.

Apart from penal provisions as per law, bank cheque bounce penalty is also levied as per RBI guidelines. However, the banks can decide for themselves the charges for customers who issue or deposit a cheque which is ultimately dishonoured. Hence, the cheque bounce penalty charges in SBI bank may not be the same as any other private bank if cheque bounce due to insufficient balance. The table below gives an idea of cheque bounce penalty charges as per information available on the particular bank’s website.


Bank Cheque Bounce Penalty

Name of Bank

Penalty for Cheque Deposited with Bank

Penalty for Cheque Drawn on Bank (Only for Insufficient Funds)

Cheque Bounce Penalty Charges in SBI - State Bank of India

Cheque upto Rs 1 lakh

Rs 150 + GST

For SME customers (small to mid-sized enterprises)

Rs 500 + GST for first 3 cheques in a year.

Rs 1000 + GST for 4th cheques onwards

Cheque above Rs 1 lakh

Rs 250 + GST

For other customers

Rs 500+ GST



For all customers (cheque returned for technical reasons)

Rs 150 + GST

Cheque Bounce Penalty in ICICI Bank

Local cheque

Rs 100 per instance

For financial reasons

First cheque - Rs 350

further cheques in same month - Rs 750


Outstation cheque

Rs 150 per instance

For non-financial reasons except signature verification

Rs 50

Cheque Bounce Penalty in HDFC Bank

Cheque returned unpaid

Rs 100 per instance

First cheque in a quarter (Local)

Rs 350

Second cheque onwards in the same quarter (Local)

Rs 750

Technical reasons (Local)

Rs 50

Cheque Bounce Penalty Charges in Axis Bank

Cheque deposited at home branch for local clearing

Rs 100

Cheque issued (Local)

Rs 500

Cheque deposited for outstation collection

Rs 50 + Charges

Cheque deposited at Bank branch for outstation collection

Upto Rs. 50,000 - Rs.50 per instrument

Rs 50,000 to 1 lakh - Rs.100 per instrument

Above Rs 1 lakh - Rs.150 per instrument


Customers should be vigilant enough for the transactions made through banks so that cheque bounce punishment in India could be avoided. If I am a customer and the bank cheque bounce penalty levied by the officials does not satisfy the facts of the matter and seems against the policy, I would seek legal guidance through banking lawyers near me and proceed accordingly.


Penalty Related FAQs on Cheque Dishonoured


Q- Is there a penalty on bounced cheque?

A- Yes. If a person draws a cheque in another person’s favour and the same is returned due to some default, both the parties have to bear the cheque bounce charges. In case of some technical reason whereby none of the parties is responsible, none of them are charged as per RBI guidelines. In case of insufficiency of funds in the drawer’s bank account, criminal charges can also be pressed.


Q- What are the charges of cheque bounce?

A- The cheque bounce penalty charges vary for different banking companies. The amount also varies for who pays cheque bounce charges based on whether the person deposited or drew such cheque.


Q- Is cheque bounce a 420 case?

A- A 420 case is referred to cheating under the Indian Penal Code, 1860. If someone draws a cheque in your favour deceiving into quick payments while there is no balance or bank account is closed, cheque bounce lawyers will definitely suggest pressing charges of cheating/ fraud. Hence, not every cheque bounce case is cheating as per Section 420.


Q- Is cheque bounce a bailable offence?

A- Dishonour cheque is not that much of a criminal offence since courts are more inclined towards repayment of the debt involved rather than punishing the defaulter. It is indeed a bailable offence. Pre-trial arrests take place in cases which are serious in nature. Cheque bounce is a financial offence and thus, bail is the rule here.

Written By:
Ridhi Khurana

Ridhi Khurana


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