A cheque bounce is usually a term used to describe the unsuccessful processing of a cheque for some reason. One of the main reasons why a cheque bounces is due to insufficient funds in the issuer’s bank account. In India, the bouncing of cheques can be considered an illegal and criminal offence, with a punishment of imprisonment and a fine under Section 138 of the Negotiable Instrument Act 1881. The issuer may be liable to pay penalties. In some cases, the bank may take legal action against the issuer. Although there are several reasons to be considered, such as signature mismatch, damaged cheque, overwriting of the cheque, mismatch of the amount and incorrectly mentioned date etc., the principal reason would be insufficient funds.
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