Q.12 (A). What do you mean by Dishonor of a
cheque.
Q.12 (B). Under what circumstances a cheque
is said to be dishonored.
DISHONOUR OF A
CHEQUE
The relation between a banker and his
customer is that of a debtor and a creditor. Money deposited will always belong
to the customer and the bank will be bound to return its equivalent to the
customer or to any person to his order. But in certain cases a banker refuses
to honour his customer’s cheque. When the payment of the cheque is refused by
the bank, it is said to be dishonored.
REASONS FOR DISHONOR
A cheque may be dishonored under the
following circumstances.
i. When balance to the credit of the
customer is insufficient to meet the cheque.
ii. When money deposited cannot be
withdrawn on demand in the case of fixed deposit.
iii. When the customer closes the
account before the cheque is presented for encashment.
iv. When the cheque is not properly
drawn.
v. If the cheque is crossed but
presented on counter for the payment.
vi. When the cheque is post dated.
vii. If death information of the A/C
holder is received.
viii. If the A/C holder is declared
insolvent by the law.
ix. If the A/C holder has stopped the
payment.
x. If the signature on the cheque is different
with the specimen signature.
xi. If the amount written in figures
is different from the amount written in words.
xii. If the cheque is presented for
payment at a branch other than the one where the customer has the account.
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