EXCEEDS ARRANGEMENT (2)- REASON OF CHEQUE RETURN

CHEQUE RETURN-REASONS

EXCEEDS ARRANGEMENT

IN SIMPLE WORDS WE CAN UNDERSTAND THE WORD EXCEEDS ARRANGEMENT MEANS LESS OR NO FUNDS IN THE CHEQUE DRAWER’S BANK ACCOUNT TO GET CLEARING.

BUT IN THIS CASE CHEQUE DRAWER BANK ACCOUNT ALSO HAS FACILITIES OF OVERDRAFT OR CASH CREDIT BUT IT IS EXCEEDING THE LIMIT.

SO CHEQUE IS DISHONOUR WITH A REASON EXCEEDS ARRANGEMENTS.

WHY CHEQUE GETTING BOUNCE CAUSE OF EXCEED ARRANGEMENT

THIS TYPE OF REMARK IS USED WHEN THE DRAWER IS GRANTED AN OVERDRAFT OR CASH CREDIT IF THE CHEQUE IS PRESENTED WHEN THE CASH CREDIT OR OVERDRAFT LIMIT IS EXCEEDED AND THERE IS NO DRAWING POWER MEANING THAT THE SECURITY MARGIN OF PLEDGED GOODS DOES NOT JUSTIFY.

FURTHER OVERDRAWING ON THE ACCOUNT IS NOT ABLE TO ALLOW.

EXCEEDS ARRANGEMENT IS AN ISSUE THAT ARISES WHEN AN ACCOUNT HOLDER SEEKS TO MAKE A PURCHASE OR CLEAR A CHECK THAT THEIR ACCOUNT CANNOT COVER WITH THE FUNDS AVAILABLE.

INSUFFICIENT FUNDS MAY LEAD TO PENALTIES THAT ARE TRIGGERED BY PAYMENT PROCESSING NETWORKS WHEN THEY SEEK TO OBTAIN FUNDS FROM A CARDHOLDER’S ISSUING BANK.

FOR AN EXAMPLE (EXCEEDS ARRANGEMENT)

A (DRAWER) ISSUED A CHEQUE OF 20000 RS IN FAVOUR OF B (DRAWEE) FOR A DATE OF 31.03.2024. A PRESENTS THAT CHEQUE IN THE BANK TO GET CLEARANCE BUT AFTER PRESENTING THAT CHEQUE HE GETS THAT CHEQUE CLEAR IN THE BANK STATEMENT IN THE MORNING AND THE EVENING CHEQUE BOUNCES WITH A REASON (EXCEEDS ARRANGEMENT). IN THIS CASE, B WILL SEE TWO ENTRIES OF CREDIT AND DEBIT OF 20000 RS IN HIS BANK ACCOUNT STATEMENT.

WHAT WE SHOULD DO WHEN WE GET CHEQUE BOUNCED WITH A REASON OF (EXCEEDS ARRANGEMENT)

  1. IN THIS CASE, WE SHOULD THINK THAT WE WANT TO RECEIVE OUR MONEY FROM THE DEBTOR (DRAWER) BUT NOT POSSIBLE CAUSE OF REASON (FUND INSUFFICIENT)
  2. SO WE NEED TO DO THIS BEFORE PRESENTING THAT CHEQUE IN THE BANK:
  3. TAKE A PENALTY FROM THE DRAWER OF ABOUT 500 PER CHEQUE CAUSE YOUR GOODWILL WILL BE HARMED BY THIS AND THE BANK WILL ALSO CHARGE YOU.
  4. TELL THE DRAWER TO DEPOSIT SUFFICIENT FUNDS IN HIS BANK ACCOUNT OR COVER THE BANK OVERDRAFT OR CASH CREDIT LIMIT THAT IS EXCEEDING.
  5. YOU CAN PRESENT THAT CHEQUE IN THE BANK UP TO 3 TIMES SO MAKE SURE SHOULD HAVE FUNDS.
  6. IF 3 TIMES YOU ARE GETTING A CHEQUE RETURN WITH A REASON ( FUND INSUFFICIENT) THEN YOU SHOULD NOT TRY TO DEAL AGAIN WITH THAT CUSTOMER CAUSE HE IS HARMFUL TO YOUR GOODWILL.
  7. PRESENT THE CHEQUE IN THE BANK AGAIN AFTER CONFIRMATION FROM THE CUSTOMER ABOUT FUND.
  8. PRESENT CHEQUE WITHIN VALIDITY PERIOD OF THAT CHEQUE.

FAQS ON EXCEEDS ARRANGEMENT

1. What does “exceeds arrangement” mean when a cheque is returned?

“Exceeds arrangement” indicates that the amount specified on the cheque exceeds the available funds or arrangement agreed upon in the issuer’s account. Essentially, there isn’t enough money in the account to cover the payment.

2. What should I do if my cheque is returned with the reason “exceed arrangement”?

If your cheque is returned for this reason, you should promptly contact your bank to understand the specific situation. It’s essential to rectify the issue by depositing sufficient funds into your account to cover the specified amount.

3. Can I avoid the “exceeds arrangement” issue in the future?

Yes, you can take steps to prevent this issue from occurring in the future. Ensure that you have enough funds in your account before issuing a cheque, and consider setting up overdraft protection or maintaining a buffer balance to cover unexpected expenses.

4. Will my bank notify me if a cheque I issued is returned due to “exceeds arrangement”?

Yes, typically, banks will notify you if a cheque you issued is returned for any reason, including “exceeds arrangement.” You should receive a notification detailing the reason for the return and any associated fees, if applicable.

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