When a cheque is returned unpaid, banks levy a fee. Typically both banks do: the issuer's bank charges for the dishonour, and the depositor's bank charges for the failed collection.
Amounts vary by bank, by account type and by country, and they can escalate for repeat returns on the same account. Your bank's published schedule of charges is the authority — this is not a figure to guess at.
The charge is the small part
Treating a bounced cheque as a fee is a mistake. The real costs sit elsewhere:
- The relationship. A supplier whose cheque bounced now wonders about your solvency. Some move you to advance payment.
- Your banking record. Repeated returns affect how your bank views the account, and can influence credit decisions.
- Legal exposure. In India, dishonour for insufficient funds is an offence under section 138 of the Negotiable Instruments Act, with a formal notice process. Consequences in Gulf states vary and have changed in recent years — the UAE moved away from criminalising bounced cheques in 2022, with civil enforcement instead. Get local advice rather than relying on general reading.
- Your time. Explaining, reissuing, reconciling.
Who pays
Normally the party at fault. If the cheque bounced for insufficient funds, that is the issuer. If it was returned for a technical defect — a signature mismatch, a missing date — that is also the issuer, since they wrote it.
Where it bounced because the depositor presented it late or damaged, the charge lands with them.
Avoiding them
Most bounces are avoidable and split into two kinds:
- Funds. Know what is due to clear. Post-dated cheques issued months ago are the usual culprit — the money was there when you wrote it and not when it landed.
- Technical. Wrong date, amount mismatch between figures and words, unclear writing. These are entirely preventable, and printing rather than handwriting removes most of them — the amount in words is generated from the figures, so the two cannot disagree.
See why cheques bounce for the full list.
