Stop Payment

A stop payment is an instruction issued by an account holder to their bank directing the bank to refuse to honour a specific cheque, electronic fund transfer, or pre-authorised payment that has been issued but not yet processed or cleared. Stop payment requests are used when a cheque is lost or stolen, when a dispute arises with the payee, or when a recurring payment needs to be cancelled. Banks typically charge a fee for processing stop payment instructions and the stop payment order remains valid for a defined period. Under RBI guidelines, stop payments on cheques must be honoured by banks if received before the cheque is presented for clearing. Importantly, a stop payment instruction cannot be used to dishonour a cheque issued as security for a debt with the intent to defraud — this would attract criminal liability under Section 138 of the Negotiable Instruments Act. For individual investors and business clients on Ventura Securities managing payment transactions, understanding the proper use and limitations of stop payment instructions is an important element of day-to-day banking and financial risk management.