CHEQUE RETURN REASONS LIST IN BANKING

CHEQUE RETURN REASONS LIST IN BANKING IN INDIA

IT CAN BE ASSUMED THAT 10% TO 15% OF THE CHEQUES GET RETURNED IN THE CLEARING SYSTEM.

The reasons for cheque returns are varied and the bank customers would be interested to know the possible cheque return reasons. With the cheque truncation system (CTS) spreading its wings all over the country, new cheque return reasons have been introduced, keeping in view the CTS specialties. If you are facing a cheque return problem in your business then it is recommended to read this post.

In short, all reasons should know when we get any cheque bounced with a particular reason, therefore, all reason is given below:

List of Cheque Return Reasons with meaning and code number

Here is the list of cheque return reasons that can be seen when a cheque is present for clearing in any bank branch such as AXIS bank, ICICI bank, BOB, PNB, Kotak, CBI, etc.

(01-03) Funds

01 Funds insufficient 

The insufficient fund is the specified reason for the cheque bounce which tells us that there is no sufficient fund in the cheque drawer’s bank account and the bank is not able to transfer the fund that’s why cheque during the cheque clearing process, the bank decides to bounce the cheque with this indicated reason ‘insufficient funds”

02 Exceeds arrangement

As a reason for cheque bounce, the meaning of ‘exceeds arrangement’ is a situation when the customer can utilize the limit of overdraft or cash credit facility as and when he finds that the funds owned by him in his account had been utilized already. And he can not utilize over the permitted limit. It means that over or above his funds, the customer can utilize the credit limit permitted to him. In case the credit limit is fully utilized and there is no possibility of honoring the cheque on account of the non-availability of the credit limit then the cheque is being returned with the reason – ‘exceeds arrangement’.

03 Effects not cleared; present again 

In simple words we can understand the word effects not cleared; present again means cheques in the debit account are in the clearing cycle but the fate is still unknown and also less or no funds in the cheque drawer’s bank account to get clearing of cheque. That’s why the cheque is dishonored with a reason effects not cleared; present again

(04-09) Refer to Drawer

04 Refer to drawer

Refer to Drawer exact meaning is there are insufficient funds in the drawer’s bank account. So due to a lack of funds issuing bank does not honor a cheque. And the cheque is returned to the payee bank with the reason “refer to drawer” meaning the cheque is dishonored.

05 Kindly contact drawer/drawee bank and please present again

It can be easily understood from reason cause the reason is clear that you should contact the drawer of the cheque as a payee. And should clear the return issue by discussing it with the drawer of the cheque. After solving the issue you should present that cheque to the bank for clearing if the drawer’s bank account has sufficient funds.

(10-14) Signature (mismatch)

10 Drawer’s signature incomplete

When the payee presents the cheque in the bank having an incomplete signature of Drawer then due to a mismatch of signature, the bank will dishonor the cheque with this reason ‘Drawer’s signature incomplete’

11 Drawer’s signature illegible (अस्पष्ट)

When the payee presents the cheque in the bank having an illegible signature of the Drawer then due to a mismatch of signature, the bank will dishonor the cheque with this reason ‘Drawer’s signature illegible’

12 Drawer’s signature differs

When the payee presents the cheque to the bank has a different signature from the signature of the Drawer then due to a mismatch of signature, the bank will dishonor that cheque for this reason ‘Drawer’s signature Differ’

13 Drawer’s signature required

When the payee presents the cheque in the bank having no signature means without the signature of the Drawer then due to the compulsory requirement of signature, the bank will dishonor the cheque for this reason “Drawer’s signature required”.

14 Drawer’s signature is not as per the mandate

when the payee presents the cheque in the bank having no match with the signature of the Drawer then due to a mismatch of signature, the bank will dishonor the cheque for this reason ‘Drawer’s signature is not as per the mandate ‘

(15-19) Signature

15 Drawer’s signature to operate account not received

When the payee presents the cheque to the bank with the signature of the Drawer but the bank did not receive the drawer’s signature to operate the account then due to a mismatch of signature, the bank will dishonor the cheque for this reason ‘Drawer‟s signature to operate account not received’

16 Drawer‟s authority to operate the account not received

When the payee presents the cheque in the bank with the signature of the Drawer but the bank does not receive the drawer’s authority to operate the account then due to no authority, the bank will dishonor the cheque with this reason ‘Drawer”s authority to operate account not received’

17 Alterations require drawer’s authentication (Under CTS the only alteration in date is permitted, in case of any alteration, the cheque will be returned)

When the payee presents the cheque in the bank with an altered signature of Drawer but under CTS the only alteration in date is permitted by the bank, in case of any alteration then due to alteration in signature and other, the bank will dishonor the cheque with this reason ‘ Alterations require drawer’s authentication

(20-29) Stop Payment

20 Payment stopped by drawer

When the payee presents the cheque in the bank and under the bank clearing system process, the bank gets a payment stop request from the cheque Drawer Then the bank will dishonor the cheque with this reason ‘Payment stopped by drawer’

21 Payment stopped by attachment order

When the payee presents the cheque in the bank and under the bank clearing system process, the bank gets an attachment order to stop the payment request from the cheque Drawer then the bank will dishonor the cheque with this reason ‘ Payment stopped by attachment order’

22 Payment stopped by court order

When the payee presents the cheque in the bank and under the bank clearing system process, the bank found or gets a court order to stop payment due to any legal preceding then, the bank will dishonor the cheque with this reason ‘Payment stopped by Court Order’

23 Withdrawal stopped owing to the death of the account holder

When the payee presents the cheque in the bank and under the bank clearing system process, the bank found or gets the Drawers account closed due to the death of the drawer (account holder) then the bank will dishonor the cheque for this reason ‘ Withdrawal stopped owing to the death of account holder’

24 Withdrawal stopped owing to the lunacy of the account holder

When the payee presents the cheque in the bank and under the bank clearing system process, the bank found or gets the Drawers account closed or the drawer is not able to confirm the payment of the cheque due to the lunacy of the drawer (account holder) then the bank will dishonor the cheque with this reason ‘ Withdrawal stopped owing to the lunacy of account holder’

25 Withdrawal stopped owing to the insolvency of the account holder

When the payee presents the cheque in the bank and under the bank clearing system process, the bank found or gets the Drawers account closed or the drawer is not able to pay the cheque amount due to insolvency of the drawer (account holder) then the bank will dishonor the cheque with this reason ‘ Withdrawal stopped owing to the insolvency of the account holder’

(30-49) Instrument

30 Instrument post-dated 

When the payee presents the cheque to the bank and under the bank clearing system process, the bank finds the cheque is dated at least one day subsequent to the date of the presentation then the bank will dishonor the cheque with this reason ‘ Instrument post-dated or post-dated cheque’ For example- (Today’s date is 12/03/2021, and the cheque date is after 12/03/2021) which means the cheque is presented before the instrument date.

31 Instrument out-dated

When the payee presents the cheque in the bank and under the bank clearing system process, the bank finds the cheque has a date out of the 3 month validity period then the bank will dishonor the cheque with this reason ‘ Instrument out-dated or out-dated cheque’ For example- ( Today’s date is 23/04/2020, and the cheque date is prior to 22/01/2020) which means the cheque is presented after the instrument’s valid date.

32 Instrument updated / without proper date (Date column on the cheque is blank)

When the payee presents the cheque to the bank and under the bank clearing system process, the bank founds the cheque did not have any date then the bank will dishonor the cheque with this reason ‘ Instrument updated / without proper date’

33 Instrument mutilated; requires a bank’s guarantee

When the payee presents the cheque to the bank and under the bank clearing system process, the bank founds the presented cheque is damaged then the bank will dishonor the cheque for this reason “Instrument mutilated; requires a bank’s guarantee”.

34 Cheque irregularly drawn / amount in words and figures differ

When the bank founds the presented cheque has a difference between the amount in words or figures then, the bank will dishonor the cheque for this reason ‘ Cheque irregularly drawn / amount in words and figures differ’

35 Clearing House stamp/date required

36 Wrongly delivered / not drawn on us

37 Present in the proper zone

38 The instrument contains extraneous matter

39 Image not clear; present again with paper (Exclusive CTS return reason)

40 Present with the document (Exclusive CTS return reason)

41 An item listed twice (presenting bank has presented the same instrument twice, this happens when first the cheque is presented via MICR and the second time via CTS or vice-versa)

42 Paper not received (Exclusive CTS return reason)

(50-59) Account

50 Account closed

51 Account transferred to another branch

52 No such account (this happens, when the account number is printed, and the account number was written by hand illegible)

53 Title of account required

54 Title of account wrong/incomplete

55 Account blocked (situation covered in 21-25)

(60-69) Crossing / Endorsement

60 Crossed to two banks

61 Crossing stamp not canceled

62 Clearing stamp not canceled

63 Instrument specially crossed to another bank

64 Amount in protective crossing incorrect

65 Amount in protective crossing required / illegible

66 Payee‘s endorsement required

67 Payee‟s endorsement irregular / requires collecting bank’s confirmation

68 Endorsement by mark/thumb impression requires attestation by Magistrate with seal

(70-79) RBI / Government cheque return reasons

70 Advice not received

71 Amount / Name differs in advice

72 Drawee Bank’s fund with the sponsor bank insufficient

73 Payee’s separate discharge to the bank required

74 Not payable till 1st proximo

75 Pay order/cheque requires a countersignature

76 Required information not legible/correct

(80-99) Miscellaneous cheque return reasons

80 Bank’s certificate ambiguous/incomplete/required

81 Draft lost by issuing office; confirmation required from issuing office

82 Bank /Branches blocked

83 Digital Certificate validation failure

84 Other reasons-connectivity failures

85 Alterations on instrument-Other than “Date” filed (Alteration/correction on instruments are prohibited under Cheque Truncation System. Return reason code applicable to instruments presented in CTS)

86 Fake / Forged / Stolen- draft/cheque/cash order/interest warrant/dividend warrant

87 „Payee’s a/c Credited’ – Stamp required 88 Other reasons (Please specify)

88 Other reason (plz specify)

When the bank is unable to clear a specific cheque due to any uncertain banking issue that is not covered in the specified list of reasons then the bank will specify the reason with the code 88-Other reason (plz specify)

92 Bank excluded

List of cheque return reasons where customers are not at fault

These are the reasons, There customers are not at fault when it happens as per source Sbi faq

CODE NO/ REASON FOR RETURN OF CHEQUE
33 Instrument mutilated; requires a bank’s guarantee
35 Clearing House stamp/date required
36 Wrongly delivered / not drawn on us
37 Present in the proper zone
38 The instrument contains extraneous matter
39 Image not clear; present again with paper (Exclusive CTS return reason)
40 Present with the document (Exclusive CTS return reason)
41 An item listed twice (presenting bank has presented the same instrument twice, this happens when first the cheque is presented via MICR and the second time via CTS or vice-versa)
42 Paper not received (Exclusive CTS return reason)
60 Crossed to two banks
61 Crossing stamp not canceled
62 Clearing stamp not canceled
63 Instrument specially crossed to another bank
67 Payee‟s endorsement irregular / requires collecting bank’s confirmation
68 Endorsement by mark/thumb impression requires attestation by Magistrate with seal
70 Advice not received
71 Amount / Name differs on advice
72 Drawee bank’s fund with sponsor bank insufficient
73 Payee’s separate discharge to bank required
74 Not payable till 1st proximo
75 Pay order/cheque requires a countersignature
76 Required information not legible/correct
80 Bank’s certificate ambiguous/incomplete / required
81 Draft lost by issuing office; confirmation required from issuing office
82 Bank / Branch blocked
83 Digital Certificate validation failure
84 Other reasons-connectivity failures
87 „Payee’s a/c Credited’ – Stamp required 88 Other reasons (Please specify)
92 Bank excluded

• Open cheque meaning, example, fillup, image & benefits
• Post dated cheque example, meaning, fillup & benefits
• Ante dated cheque meaning, example, filling & benefits
• Stale cheque meaning, filling, example & benefits
• Self cheque filling, example, features & benefits

Faqs on Cheque return reasons