Dishonored and stale cheques


Dishonored and stale cheques
When a cheque is received from a debtor it is debited in the Cash Book and sent to the bank.  The bank will credit the depositor's account with the amount of the cheque.  The cheque clearing system takes normally a minimum of three days. The drawer’s banker for a number of reasons may not honor a cheque. Some of the reasons for a cheque to be dishonored are:

a)         Errors on the cheque itself in date, name of payee, signature differences and amount variance between figures and words, etc.

b)         Lack of sufficient funds in the account of the drawer.  In Tanzania it is unlawful to write a cheque which is not supported by funds in the bank.

c)         Stale cheques are also automatically dishonored. A cheque goes stale after six months have elapsed from the date indicated on the cheque.

When a cheque is dishonored, the depositor's balance is decreased by the amount of that cheque. The banker debits the depositor’s account to effect the decrease which cancels the earlier credit made when that cheque was deposited.

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