Reasons for Dishonouring a Cheque

Why would banks (drawee) dishonour a cheque? Here are some reasons below:

1. If the drawer is bankrupt.

2. Insufficient funds in the account of the drawer. 

3. Alteration of the Cheque: If alteration on the cheque is not signed against by the drawer, the bank will not honour it.

4. If the cheque is not signed by the drawer.

5. If the drawer’s signature is irregular.

6. If the cheque is post-dated.

7. If the cheque is stale.

8. If the account is frozen.

9. A difference in figures and words.

10. Mutilation of a cheque.

When a cheque is torn into two or more pieces and presented for payment, such a cheque is called a mutilated cheque.