Question

Study the image. Explain any five conditions for the refusal of the same by the bank.

Answer 1

The image shows a cheque from State Bank of India for ₹ 5,000. A bank can refuse payment or dishonour such a cheque in the following circumstances:

1. Insufficient Funds: If the funds on the credit of the drawer are not adequate to make payment of the cheque (i.e., the drawer’s account does not have ₹ 5,000), the bank will dishonour the cheque.
2. Cheque is Stale: If the cheque is older than three months from the date it was written on. A ‘stale check’ is one that the bank refuses to pay.
3. Stopped Payment: If the drawer has stopped payment of the cheque by providing written notification to the bank, the bank will refuse to honour it.
4. Signature Mismatch: If the drawer’s signature on the cheque does not match the specimen signature in the bank’s records, the bank can refuse payment.
5. Difference in Amount: cheque: If the amount written in figures (₹ 5,000) and the amount written in words (‘Five Thousand Only’) differ, the bank will dishonour the cheque.