A cheque return memo is the slip a bank issues when it returns a cheque unpaid. It states which cheque was returned, when, and why, usually as a numbered reason code with a short description. The payee receives it from their own bank along with the returned cheque or its image. It is the official record of the return.
For a payee in India, the memo is more than a notice. It starts the clock on a Section 138 legal notice, and the court will treat it as evidence that the cheque was dishonoured.
What a return memo contains
- Cheque details: cheque number, date and amount.
- Drawer and drawee: the account holder's name or account number, and the drawee bank and branch.
- Presenting details: the collecting bank, the clearing date or session, and often the payee's account.
- Reason for return: the reason code and its description, for example "01 – Funds insufficient". Sometimes more than one reason is ticked.
- Date of return and the bank's stamp or authorised signature.
The details matter. Under Section 146 of the Negotiable Instruments Act, a court presumes the cheque was dishonoured when a bank's slip or memo "having thereon the official mark" denoting dishonour is produced. The Kerala High Court has held that the memo should identify the cheque by number, date and amount for that presumption to apply. Check the memo against the cheque when you receive it.
Common return reason codes in India
Indian banks use a standard list of return reasons for CTS clearing, drawn from the Uniform Regulations and Rules for Bankers' Clearing Houses. The most common are below, with the wording as published on the SBI reason-for-return page:
| Code | Reason | What it usually means |
|---|---|---|
| 01 | Funds insufficient | Not enough balance. The one that can lead to Section 138. |
| 02 | Exceeds arrangement | Would breach the overdraft or credit limit. Also funds-related. |
| 03 | Effects not cleared, present again | Funds paid in but not yet cleared |
| 04 | Refer to drawer | A general refusal. Ask the drawer |
| 10–14 | Drawer's signature incomplete / illegible / differs / required / not as per mandate | Signature problems |
| 17 | Alteration requires drawer's authentication | A change was not authenticated |
| 20 | Payment stopped by drawer | A stop payment was placed |
| 21–22 | Payment stopped by attachment order / court order | Legal restriction on the account |
| 30 | Instrument post dated | Presented before the cheque date |
| 31 | Instrument out dated / stale | Presented after validity expired |
| 32 | Instrument undated / without proper date | Date missing or invalid |
| 34 | Cheque irregularly drawn / amount in words and figures differs | Words and figures mismatch |
| 38 | Instrument contains extraneous matter | Extra writing or stamps on the face |
| 39 | Image not clear, present again with paper | Scanning problem, often a damaged leaf or MICR band |
| 50 | Account closed | The drawer's account no longer exists |
| 52 | No such account | Account number not found |
| 55 | Account blocked | Frozen, for example by a court order or on the death of the holder |
| 85 | Alterations on instrument other than "Date" field | A changed payee or amount on a CTS cheque |
| 86 | Fake / forged / stolen cheque | Suspected fraud |
Codes 33 and 35 to 42 mostly cover clearing or bank-side issues where the customer is usually not at fault. Banks generally should not levy return charges on the customer for those. For what each technical reason means for the person who wrote the cheque, see cheque writing mistakes and why cheques bounce.
The Gulf equivalent
Gulf banks do not use India's numbered list. Each bank returns the cheque with a return slip or advice stating the reason in words: insufficient funds, signature differs, post-dated, account closed, and so on. The reason may also be stamped or written on the cheque itself. Practice in the UAE has some specific features:
- Statement on the cheque. UAE law lets the bank prove refusal of payment by a dated statement written on the cheque, instead of a formal protest.
- Executive instrument. Since 2 January 2022, a cheque bearing the bank's statement that it is unpaid because funds are unavailable or insufficient can be taken directly to the execution judge for enforcement. The Central Bank of the UAE's FAQ explains the mechanism. That makes the bank's marking on the returned cheque the key document.
- Partial payment certificate. If the account holds less than the cheque amount, UAE banks must pay what is available unless the holder refuses. They mark the partial payment on the back and give the holder a certificate. Qatar introduced a similar partial payment rule from 6 April 2024.
Keep the original returned cheque together with the slip, and never write on either.
Why the memo matters for legal notice timelines in India
General information, not legal advice. Laws and bank rules change; check with your bank or a qualified lawyer for your situation.
For a cheque returned for insufficient funds or exceeding arrangement, Section 138 sets a strict sequence:
- The payee must send a written demand notice to the drawer within 30 days of receiving information from the bank that the cheque was returned. In practice that information is the return memo, so its date of receipt matters.
- The drawer then has 15 days from receiving the notice to pay.
- If they do not, the payee can file a complaint within one month after those 15 days expire.
Miss the first step and the criminal remedy may be lost, though civil recovery remains. Note the date you received the memo, keep the envelope or SMS that brought it, and see cheque bounce legal notice and cheque bounce law in India for the full procedure. Section 138 is not limited to code 01. The Supreme Court has held that returns such as "account closed", "payment stopped" and "signatures do not match" can also count as dishonour under it (Laxmi Dyechem v. State of Gujarat, November 2012), so treat those memos with the same urgency. Purely technical returns, such as a stale or undated cheque, are usually settled with a fresh cheque.
What to do when you receive one
As the payee: read the reason first. A technical return needs a phone call and a replacement cheque. A funds return needs a decision about re-presenting, negotiating or sending a legal notice, and the clock is already running.
As the drawer: find out from your bank which cheque came back and why, then fix it. Fund the account, issue a corrected cheque, or update the signing mandate. Record the return against the cheque. In ChequeMaster you mark it Returned, so it shows up on the dashboard until it is replaced or settled.
