circumstances may a cheque be dishonored by the bank

9 circumstances that may lead the bank to dishonor a cheque

there are several circumstances that may lead a bank to dishonor a cheque. Here are some common reasons:

  • Drawer’s Instruction: If the drawer instructs their bank not to honor a particular cheque, the bank will comply with the instruction and dishonor the cheque.
  • Discrepancy in Amount: If the amount of money written in words differs from the amount written in figures on the cheque, the bank may dishonor it due to the inconsistency.
  • Stale Cheque: A cheque becomes stale if it is presented for payment six months or more after the date written on the cheque. Banks usually do not honor stale cheques, and they may dishonor it if it is presented beyond the specified period.
  • Post-Dated Cheque: A post-dated cheque is one that is presented for payment before its maturity date. If a cheque is presented before the date written on it, the bank may dishonor it and refuse payment until the specified date arrives.

  • Signature Discrepancy: If the signature of the drawer on the cheque differs significantly from the specimen signature provided to the bank during the account opening process, the bank may consider it a potential case of forgery and dishonor the cheque.
  • Account Closure: If the drawer’s account has been closed or has insufficient funds, the bank will dishonor the cheque as there are no funds available for payment.
  • Missing Signature in Joint Account: In the case of a joint account, if all the required signatories have not signed the cheque, the bank may dishonor it as it does not comply with the account requirements.
  • Undated Cheque: If a cheque does not have a date or the date is not clearly mentioned, the bank may dishonor it as it does not meet the basic requirements for a valid cheque.
  • Defaced or Damaged Cheque: If a cheque is defaced, torn, damaged, or illegible to the extent that the bank cannot verify its authenticity or payment instructions, the bank may dishonor it.
  • Drawer’s Status: If the drawer of the cheque is deceased or declared bankrupt, and the bank is aware of this information, they may dishonor the cheque as it is not valid in such circumstances.
  • Suspected Forgery: If the bank suspects any forgery or fraudulent activity associated with the cheque, they may dishonor it to prevent potential financial loss.

It’s important to note that each bank may have its own specific policies and procedures regarding dishonoring cheques. These reasons provide a general understanding, but banks may have additional grounds for dishonoring a cheque based on their internal policies and regulatory requirements.


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