RBI Tightens Rules on Cheque Bounce Cases with Swift Notifications, Penalties, and Red Flag Alerts

The Reserve Bank of India has introduced new cheque bounce guidelines to address delays, repeat defaults, and legal backlogs, while ensuring fairness and early resolution.

Banks are not required to notify customers within 24 hours of a cheque bounce, and habitual defaulters may face account freezes and red flag alerts across the banking system. Penalties have also been standardized to eliminate discrepancies.

The RBI discourages cheque book bans and encourages early resolution through pre-legal mediation, particularly in cases of stop-payment or signature mismatches.

While cheque bounce remains a criminal offense under Section 138 of the Negotiable Instruments Act, the reforms focus on faster processes, digital tools, and enhanced customer transparency.