Cheque Bounced Even After Having Balance in Account! Find Out Why?

Cheque payment is one of the common method of paying fund to someone you wish to. It is seen the uses of online payment system is increasing every day, but the old school way of doing it, which is cheque payment is still prevailing.

Certain times, when executing this payment. The transaction is failed due to specific reasons such as insufficient fund, signature mis-match, overwritten cheque etc. but there are times, the cheque you have presented to your bank is bounced even if you maintain good amount of balance in the bank account.

At such scenario, what could be the reason of bounced cheque. To find out we will dig some facts on cheque payment system. How it works and what are the basics that you need to aware of?

How Cheque payment Works?

Cheque enables you to do financial transaction, whether you want to withdraw cash from the bank or transferring funds to friends and family, cheque enables you to do so. The uses of it are quite simple.

The Clearing Process

  • Draw cheque in whose favour you intend to pay.
  • Fill up all the required sections such as payee name, amount in word and figure and put the date of payment.
  • Sign wherever required and hand it over to the person you have drawn the cheque.
  • Now, he presents the cheque to his bank. Bank will processed for clearing and your account will be debited while the amount credits to the beneficiary.

Cheque Payment For Cashing Out.

  • Draw cheque self or to someone.
  • If it’s a self cheque write self in the payee section otherwise write the name of the person you are giving to someone else.
  • Present it to the bank counter. Bank staff will verify the cheque. Bank may ask to sign over the counter.
  • Your cheque will be processed and you get the money.
  • In case of third party payment, you need to endorse your signature on the back side of the cheque, verifying the signature of the person.

Payment Transfer Between The Same Bank.

  • Draw cheque in whose name you are paying funds. Fill up all the details such name of payee, amount in words and figures, put the payment date and sign it.
  • Get a deposit slip or fund transfer slip. Fill the details of beneficiary. It includes account number, name, address, amount and sign it.
  • Submit it to the counter in charge. Your account will be debited and beneficiary account will be credited.
  • Payment for NEFT, RTGS and Nepal remittence require special type of transfer slip. The rest process is same.

Various Reasons Why Bank Reject Cheque Payment

Signature Mismatch: One of the most common reasons of cheque bounce is due to signature mismatch of the drawer. A person’s signature changes as time goes by. It’s completely natural that as we age a certain change in us handwriting is observed. It will be even more prominent when we become senior person. Timely update the fresh signature in bank system is required to avoid further rejection of check payment.

Hold In Ban Account: Putting a hold in a bank account in not a new thing. Bank exercise these right whenever there is a need of concern. Like for example, when you have loan overdue, your payment account can get hold till you the dues. Other cases include KYC update requirement, court order or income tax order.

Suspicious Transaction: Bank has robust structure for detecting any fraudulent transaction throughout the day. When certain transactions are happening multiple times in a suspicious manner, bank usually put a hold or freeze the account temporarily. This is done to avoid further loss of funds from the account. If nothing serious occurred you can contact the person in charge and request for removal of holds.

Overwritten or Incomplete Cheque: Do you know that you cannot overwrite anything on a cheque. If you do, your cheque will get bounced as per NI act. The same goes with incomplete cheque or Inchoate Cheque.

Wrong Endorsement: By overlook, if you make a mistake when endorsing a cheque, it might get rejected. Specially if it’s an order cheque. The order cheque is paid by order. That means, you order your bank to pay a sum of money to specific person only. When you have order to pay to Mr X and Mr Y visit the bank for withdrawal, he will not get the funds.

Damaged Cheque: Don’s use the damaged cheque. You bank will not process at any cost. It is against the rules and regulations advised by the payment and settlement act. While drawing a cheque, if its damaged or torn, reject and dispose of the cheque. Write a new cheque and present.

Amount In words And Figures Are Mismatched: When writing a cheque, do double check before handing out to the bank staff. If the amount in words and figures are mismatched your cheque will not be paid.

Wrong Beneficiary Details: it quite common to find these issues. You have submitted the cheque for payment to other account holder who is- let’s say your business partner. By chance you have given the wrong name, though you have provided correct account number with valid bank codes (IFSC or Branch Code). Bank will reject the payment stating invalid name of beneficiary account holder.

Best Practices of Using Cheques

It is advisable to use all the financial tools legibly with proper care. It’s your bank account and you are the sole authority of using it. If you do not take care of it, the consequences might be damaging in the later days.

Applicable to all sort of services provided to you. It may be your ATM card, Credit card, internet Banking or Mobile Banking.

One is that, you have to know what you are getting into. The other is you should know how to execute it. All these come down to having following best practices advise by the bank. Here are 10 best practices of effective uses of cheque book.

Safe Keeping of Cheque-book: Keeping your cheque-book is one of the foremost things you need to do. Keep it in a safe or almirah, where it’s not retrievable by anyone. You should be the only person accessible to your cheque-book.

Keep A Tap on Cheque Uses: Noting the cheque number every time you pay to someone will eventually help you tracing transaction details. Though it will be reflected in the statement of account. Manual keeping of paid cheque details will add value to your business.

Keep A Stock of Cheque-book: Keeping a sufficient amount of cheque leaves in hand is required. When suddenly you have exhausted all of it, you might be in a situation where withdrawing funds from account is impossible. To avoid such situation, it is advisable to have ample amount of cheque with you. Moreover, applying new cheque-book take time. It will take 5 to 10 days to reach it to you depending on your location.

Update Signature every Now and Then: As mentioned earlier, signature changes with time. To avoid cheque bounce due to that; it makes sense to update signature once a while.

Use Cheque Only in reliable Source: It will protect your account from exposing to unscrupulous person. There are moments when you do not feel comfortable giving out your account details. That’s the starting of any financial fraud you can think of.

Don’t Pre-fill Any Cheque Leave: Most of us are having these bad habits of signing blank cheque and keep it for emergency purpose. The logic is understandable but it comes with huge inherent risk too. You are keeping these signed cheques for your family members to access your account. When it falls to the wrong hand, you might not even know the unauthorized transaction has already been initiated. Bank will pay as you have signed properly.

Don’t Hand-over Blank Cheque: One other thing is that you should avoid handing over a signed blank cheque as a security. You may be given to known or unknown person. But the implication of such contract has huge downside. You may even go to jail or pay a hefty fine as penalty.

Don’t Use Post Dated Cheque Option: When a person wants to pay funds in future date, he may execute or draw a cheque in future date. Postdated cheques can be paid as per the payment date mentioned on the cheque.

This sort of payment works best for few category of people. It better is you avoid those future payment with cheque. Pay when it is due.

Request Stop Payment of Cheque If You Have Lost It: Do you know that your account has the facility of stopping cheque payment. It can be done online through internet banking as well as offline by visiting the bank.

Either way, the facility is quite good and reliable when you have lost a cheque-book or you have misplaced it. It helps even when you have doubt about a particular unpaid cheque. You may block the payment and secure your account effectively.

Any Doubt Don’t Shy Away: One other thing about the uses of cheque-book is that if you have any doubt over anything related to cheque payment, you must approach your bank without hesitation.


Cheque getting bounced even after having sufficient balance in the account is not satisfying. The reason may be as simple as signature mismatch, which could be avoided with action taken in time. It is recommended to check your account details once a while. Just to confirm if everything is alright?

Following and implementing the above-mentioned tips might help you avoid the unnecessary rejection of payment.

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