Cheques Bouncing New Rules - Under Negotiable Instruments (Amendment) Bill, 2015

In India, cheque bounce cases are the most common financial offences and carry a big penalty for the issuer. But with the government's new norms, there's a bit of relief for victims. 

Let's look at a few points on cheque-bouncing norms and things to follow that can help you.

New norms for bounced cheques

1. The government has notified the Negotiable Instruments (Amendment) Bill, 2015, which will allow cheque bounce cases at a place where the cheque was presented for clearance and not the place of issue.
2. In the recently concluded winter session, Parliament passed the Negotiable Instrument (Amendment) Bill, 2015.
3. According to the law, a case of bounced cheque can be filed only in a court in whose jurisdiction the bank branch of the payee lies.
4. The new law may help in ensuring a fair trial.
5. The legislation also mandates centralisation of cases against the same drawer.
6. Once a cheque is dishonored, the bank of the drawee gives the banker of the drawer a 'Cheque Return Memo' with reason for the non-payment.
7. Within 30 days of the receipt of the memo, a legal notice is to be sent to the defaulter with all relevant details of the transaction.
8. After the receipt of notice, the drawer of the cheque is bound to make a payment within 30 days of receiving the notice.
9. In the event of failure to do so, the drawee of the cheque can file a criminal complaint at a magistrate's court within a period of 30 days of the expiry of the notice period.

Key points to know about cheques

1. Dishonour of cheque is a criminal offence under the Indian Penal Code as well as the Indian Negotiable Instruments Act.
2. Under Sec 417 and 420 of IPC 1960: the drawer of the cheque can be prosecuted and appropriate punishment may be handed out.
3. To apply Sec 417 and 420 of the IPC, a case of cheating has to be proven.
4. A criminal liability can be established under Section 138 of Negotiable Instruments Act, 1881 too.
5. Under Sec 138, the drawer of a dishonoured cheque may be jailed for 2 years or fined double the amount of the cheque or both.
6. There should always be a minimum balance in your account even after the cheque is encashed.
7. One has to pay heavy penalty due to insufficient funds by the respective banks of the defaulter and the payee.
8. Under RBI guidelines, a bank can stop issuing cheque book facility to a customer who repeats a bounce offence more than four times; valued at over Rs 1 crore .
9. A bounced cheque affects your CIBIL score.