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    Question

    As per RBI guidelines, what is the penalty for a person

    whose cheque is dishonoured for insufficiency of funds under the Negotiable Instruments Act?
    A Fine up to ā‚¹25,000 only Correct Answer Incorrect Answer
    B Imprisonment up to 1 year or fine only Correct Answer Incorrect Answer
    C Imprisonment up to 2 years or fine up to twice the cheque amount or both Correct Answer Incorrect Answer
    D Imprisonment up to 6 months only Correct Answer Incorrect Answer
    E Ban from holding a bank account for 5 years Correct Answer Incorrect Answer

    Solution

    Section 138 of the Negotiable Instruments Act, 1881, states that dishonour of cheque due to insufficient funds can attract imprisonment up to 2 years or fine up to twice the cheque amount or both.

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