XII Banking - Question 12 - Dishonour of Cheque

Q.12 (A). What do you mean by Dishonour of a cheque.

Q.12 (B). Under what circumstances a cheque is said to be dishonoured.




DISHONOUR OF A CHEQUE
The relation between a banker and his customer is that of a debtor and a creditor. Money deposited will always belong to the customer and the bank will be bound to return its equivalent to the customer or to any person to his order. But in certain cases a banker refuses to honour his customers cheque. When the payment of the cheque is refused by the bank, it is said to be dishonoured.


REASONS FOR DISHONOUR

A cheque may be dishonoured under the following circumstances.

i. When balance to the credit of the customer is insufficient to meet the cheque.

ii. When money deposited cannot be withdrawn on demand in the case of fixed deposit.

iii. When the customer closes the account before the cheque is presented for encashment.

iv. When the cheque is not properly drawn.

v. If the cheque is crossed but presented on counter for the payment.

vi. When the cheque is post dated.

vii. If death information of the A/C holder is received.

viii. If the A/C holder is declared insolvent by the law.

ix. If the A/C holder has stopped the payment.

x. If the signature on the cheque is different with the specimen signature.

xi. If the amount written in figures is different from the amount written in words.

xii. If the cheque is presented for payment at a branch other than the one where the customer has the account.