BANKING AFFAIRS

Detailed explanation-1: -Dishonoured cheques (also spelled check) are cheques that a bank on which is drawn declines to pay (“honour”).

Detailed explanation-2: -An unpresented cheque simply means that a cheque has been written and accounted for, but it has not yet been paid out by the bank from which the money is being drawn. Unpresented cheques are also referred to as outstanding cheques because the funds in question are, as the name suggests, outstanding.

Detailed explanation-3: -In a bank reconciliation the outstanding checks are a deduction from the bank balance (or balance per the bank statement). If an outstanding check from the previous month did not clear the bank account in the current month, the check will remain on the list of outstanding checks.

Detailed explanation-4: -The payee may choose to prosecute the payer or allow the payer to re-issue a cheque within three months. The payer may end up in jail for up to two years for issuing a dishonoured cheque. Apart from this, banks also charge penalty for dishonour of cheque. The penalty varies from bank to bank.