A week before, a technical glitch in banks’ clearing houses resulted in a two-day delay in cheque clearances by Mumbai-based banks. As expected, funds remained stuck and the delay caused anxiety among customers who had issued third-party cheques. Their fear: With automated systems in place, any cheque presented in their account would automatically 'bounce' due to lack of funds.
But, according to R K Bansal, ED, IDBI Bank: "Such occurrences would lead to both inward and outward clearing delays, so chances of third-party cheques bouncing are few." Credit expected from cheques deposited in one's account are called inward clearing and cheques issued to others that need to be cleared are known as outward clearing.
Unless there is delay due to the bank, customers issuing cheques without enough funds in their accounts are penalised. While public sector banks charge between Rs 100 and Rs 200 for bounced cheques, this can be as high as Rs 500-700 in case of private sector banks. Additionally, one may have to pay late-fee penalties, if the cheques returned were meant for home/auto lenders, credit card dues or even utility service providers.
| OF CHEQUES & ISSUANCES |
| * Banks levy penalty for cheque bounces & ECS failures |
| * ‘Bounces’ impact on customers’ credit scores |
| * Ask for reversal of penalty and explanation in writing if the bank, and not you, is at fault |
| * Maintain a gap of three days between cheque deposit and issuance |
"Bounced cheques and payment delays reflect in the customer's Cibil score. So, in the rare case when despite the bank's fault the customer is charged a penalty, he should follow up for a reversal of the charges," says Murlidharan R ,COO, Dhanlaxmi Bank.
Customers should ensure the bank provides them a letter mentioning the reversal of charges, as well as the cause of the delay. This should then be handed over to lenders and credit-rating agencies like Cibil and so on.
Fund transfers and credits for cheque deposits belonging to the same bank and branch reflect immediately. But, if a cheque belonging to another bank is deposited in your account on a certain date, the credit would reflect only on the second day as 'shadow funds' or expected balance. The 'clear balance', which are the funds that can be used, will only be available on the third day. So, maintain a gap of at least three days before issuing third-party cheques related to that account.
At times, cheques presented to your account aren't cleared due to insufficient funds/ wrong date/ absence of signature and so on. Whatever the reason, the customer will have to pay a penalty.
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"Banks cannot hold on to a cheque. It will either return it to the presenting bank or ask the bank to present the cheque again the next day, by which time the account is expected to have the required funds. Since there is a cost attached to these transactions, the bank charges customers," says V N Kulkarni, chief counsellor of Bank of India's Abhay Debt Counselling.
When cheques issued to third parties like your utility service provider and so on bounce repeatedly, the bank will notify the customer and close the account. But, a bank may threaten legal action when the cheque bounces are related to its own loan account. Bouncing of cheques due to lack of adequate finances is considered a criminal offence and is punishable by law.
Defaulters could be asked to pay double the bounced amount and may even have to face a two-year jail term in some cases.
