Dishonoured cheque

Lost or bounced cheques result in late payments and affect the relationship with customers.

Among the consequences of issuing a NSF cheque are actions by financial institutions, civil liability to the drawee, and possible criminal penalties.

[2] The recipient may choose not to accept cheques in the future from the writer (typically recorded on a paper or electronic "Do not accept cheques from..." list), or may suspend the cheque-writer's privileges until the cheque-writer has made good on the debt.

In India, a bounced cheque is a criminal offence, punishable by fines, jail term, or both under Section 138 of the Negotiable Instruments Act, 1881.

[6][7] In Israel, a bounced cheque without cover incurs a negative record in the credit history of account holder(s).

Until January 2013, a bounced cheque was a criminal offence in the United Arab Emirates that led to imprisonment of the person who wrote it.

An agency run by the district attorney will pursue the drawer of the cheque by attempting to collect the funds in exchange for avoiding criminal prosecution.

Normally, if the cheque writer can cover up their bad credits in sixty days, all charges will be dropped.

In England and Wales, the use of the endorsement "refer to drawer" has become standard after a bank was successfully sued for libel after returning a cheque incorrectly endorsed "insufficient funds"; the court ruled that, as there were sufficient funds, the statement was demonstrably false and damaging to the reputation of the person issuing the cheque.

[1] Even with the use of this revised endorsement, the mere implication that funds were insufficient has been held to be libelous in other cases of banks mistakenly refusing to pay cheques.