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Dishonour/Bouncing of Cheques – RBI Guidelines

In case of frequent dishonor of cheques, RBI has issued following procedure for the banks to follow:

1.   In case of dishonor of cheques for the third time on a particular account of the drawer for a particular financial year, bank should issue “cautionary advice” to the account holder.

2.  If it continues for the fourth time also, in case of cheques valuing for more than Rs 1 crore on a particular account for the financial year no fresh cheques are to be issued. Banks may also consider closing the current account at its discretion.