5 reasons why cheques are turned down

From poor balance to mismatching signatures, here's what you need to look out for in dishonoured cheques.

1) Insufficient funds: The cheque amount is more than the free balance available in the drawer’s bank account.

2) Irregular signature: The signature of the drawer on the cheque does not match the specimen signature available with the bank.

3) Stale and post-dated cheques: A cheque presented 3 months from the date written on it or presented before the date written on it.

4) Alterations: No alternation is permitted in the payee name, amount in words or in figures. The drawer signs near it to verify any other alteration.

5) Frozen account: If a court or government orders that a customer’s account has to be frozen, the bank will dishonor any cheque presented on behalf of that customer.

The content is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.