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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 β‚Ή25,000 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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