Despite the growing usage of electronic means of payment, cheque is still commonly used among bank depositors.
Apart from the inconvenience that a person could encounter, it can also be embarrassing when one gets to the bank to cash a cheque and the bank rejects it.
A cheque is a signed document by the account owner (drawer) that orders the bank to pay the stipulated amount written on it to the person (drawee) in whose name the cheque has been issued.
The major reasons why a bank may reject a cheque presented to it are as follows:
A cheque will be dishonoured if the amount written in words and what is written in figure do not tally. It will also be dishonourned if it is not written either in words or in figure.
If the withdrawer does not sign on the alteration on the cheque, it will also be rejected by the bank.
A cheque may not be honoured if the date is written incorrectly or written in advance or many months in arrears.
The bank can also refuse to honour the cheque if the name of the person is not clear or it is doubtful.
The bank can reject the cheque if the account number of the drawee is not correct.
Irregular signature on the cheque, which does not match with the owner?s signature will lead to the refusal of the bank to honour the cheque.
If the drawer does not have sufficient funds in his account, or if the withdrawal of the cash will make the account balance get below the minimum required, the bank will not honour the cheque.
If the cheque is not in good shape or rough, torn and distorted, it could be rejected.
The bank can reject a cheque if it has information that the owner is dead, insolvent, or insane.
The bank will also not honour the cheque if the drawee is presenting it when the owner has already closed the account.
In some instances, the owner of the cheque may give the bank an instruction to stop the cheque for different reasons.
The bank will refuse to honour a cheque if there are issues on the account. If the government or a court order freezes the account and stops withdrawal of funds from it, any cheque presented during that period will not be honoured.
In some instances, the bank may want to confirm from the owner of the account if it should honour the cheque. If the owner has given the bank the instruction to confirm from him before honouring a certain amount but he cannot be reached, the bank will not honour the cheque.