What are the consequences of ECS dishonour?

You may be reported to a credit collection agency or credit bureau. In such a scenario, you may need to pay collection costs, in addition to the outstanding loan amount. This also makes you ineligible for further borrowing. The lender can take legal action against you as well, if the cheque/ECS mandate bounces as it is a criminal offence in India.

Under the Negotiable Instruments Act, 1881 and The Payment and Settlement Act 2007, the person who had issued the bounced cheque/ ECS is punishable with imprisonment for a term which may extend to two years, or with a fine which may extend to twice the amount of the cheque, or with both. The lender can also file an additional civil suit for recovery.

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