Levy Cheque return charges only if customer is at fault

Cheque return charges shall be levied only in cases where the customer is at fault and is responsible for such returns. The illustrative,but not exhaustive, list of returns, where the customers are not at fault are indicated in the annex.

DPSS.CO.CHD.No. 2030/03.06.01/2012-2013

May 7, 2013

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /Local Area Banks
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks

Madam / Dear Sir,

Delay in re-presentation of technical return cheques and levy of charges for such returns

As you are aware, banks are expected to indicate the timeline for realisation of local/outstation cheques in their Cheque Collection policy(CCP) and charges for cheque returns to be levied in an upfront manner with due prior notice to the customers as enumerated in RBI circulars no. DPSS.CO. (CHD) No. 873 / 03.09.01 / 2008-09 dated November 24, 2008 and DBOD.No.Dir.BC. 56 /13.03.00/2006-2007 dated February 2, 2007 respectively.

2. However,recently, instances have been brought to our notice where banks are (i) levying cheque return charges even in cases where customers have not been at fault in the return and (ii) delaying the re-presentation of the cheques which had been returned by the paying banksunder technical reasons. Both of these issues result in unsatisfactory customer service.

3. It is, therefore, considered necessary to streamline the procedure followed by all banks in this regard. Accordingly, banks are advised to adhere to the following instructions with immediate effect:

  1. Cheque return charges shall be levied only in cases where the customer is at fault and is responsible for such returns. The illustrative,but not exhaustive, list of returns, where the customers are not at fault are indicated in the annex.
  2. Cheques that need to be re-presented without any recourse to the payee, shall be made in the immediate next presentation clearing not later than 24 hours(excluding holidays) with due notification to the customers of such re-presentation through SMS alert, email etc.

4. Banks are accordingly advised to reframe their CCPs to include the procedures indicated in paragraph 3(i) and 3(ii) above, and may note to give publicity to their revised CCPs for better customer service and dissemination of information.

5. The above instructions are issued under Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

6. Please acknowledge receipt and confirm compliance.

Yours faithfully,

(Vijay Chugh)
Chief General Manager


Illustrative but not exhaustive list of objections where customers are not at fault

(Applicable for Instrument and Image-based Cheque Clearing as detailed in Annexure D to Uniform Regulations and Rules for Bankers’ Clearing Houses)

Code No.

Reason for Return


Instrument mutilated; requires bank’s guarantee


Clearing House stamp / date required


Wrongly delivered / not drawn on us


Present in proper zone


Instrument contains extraneous matter


Image not clear; present again with paper


Present with document


Item listed twice


Paper not received


Crossed to two banks


Crossing stamp not cancelled


Clearing stamp not cancelled


Instrument specially crossed to another bank


Payee’s endorsement irregular / requires collecting bank’s confirmation


Endorsement by mark / thumb impression requires attestation by Magistrate with seal


Advice not received


Amount / Name differs on advice


Drawee bank’s fund with sponsor bank insufficient(applicable to sub-members)


Payee’s separate discharge to bank required


Not payable till 1stproximo


Pay order requires counter signature


Required information not legible / correct


Bank’s certificate ambiguous / incomplete / required


Draft lost by issuing office; confirmation required from issuing office


Bank / Branch blocked


Digital Certificate validation failure


Other reasons-connectivity failure


‘Payee’s a/c Credited’ – Stamp required


Bank excluded
Categories: Fema / RBI

View Comments (3)

  • I had bitter experience because of this latest processing of cheques. I have issued a cheque on a private bank to LIC and the same was presented by the bankers of LIC (again a private bank). Though I had sufficient balance the cheque was returned by my Banker stating that image is not clear (sl. No. 39 in the above list). The Bankers of LIC returned the same to LIC and in turn LIC had sent back the cheque to me and directing me to pay cheque return charges of Rs. 125/- and instructing me to pay in cash the premium and they would not accept cheques from me hereinafter. After my strong protest to both the bankers and LIC, the collecting Bank (LIC's Bank) regretted for the mistake and got back the same cheque. Other two's response was poor.

  • Sir,

    Your above topic is very useful. Kindly think it over..... if the cheque issued by a party is returned with a note of insufficient funds, both the parties are charged. In this issue its clear that the fund insufficient is the problem of the cheque issuer. I recommend that the both charges are to be debited to the cheque issuer. I hope you all will agree to it.

  • Sir,

    I have given to my insurance company to debit my a/c through ECS. Due to the reasons known to the insurance company they initiated the process one day later than the due date which my banker confirmed and informed me that the next month also will be like that as it has to be streaqmlined. What punitive action I can take.



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