---
kind: "section"
citation: "12 C.F.R. § 229.32"
title: "12"
number: "229.32"
heading: "Returning bank's responsibility for return of checks."
url: "https://uscodex.org/cfr/12/229.32"
---

# §229.32. Returning bank's responsibility for return of checks.

- (a) **Return of checks.**
  - (1) Subject to the requirement of expeditious return under [paragraph (b)](#b) of this section, a returning bank may send a returned check to the depositary bank, to any other bank agreeing to handle the returned check, or as provided in [paragraph (a)(2)](#a-2) of this section.
  - (2) A returning bank that is unable to identify the depositary bank with respect to a check may send the returned check to any collecting bank that handled the returned check for forward collection if the returning bank was not a collecting bank with respect to the returned check, or to a prior collecting bank, if the returning bank was a collecting bank with respect to the returned check. A returning bank sending a returned check under this paragraph to a bank must advise the bank to which the returned check is sent that the returning bank is unable to identify the depositary bank.
  - (3) A returning bank may convert a check to a qualified returned check. A qualified returned check shall be encoded in magnetic ink with the routing number of the depositary bank, the amount of the returned check, and a “2” in the case of an original check (or a “5” in the case of a substitute check) in position 44 of the qualified return MICR line as a return identifier. A qualified returned original check shall be encoded in accordance with ANS X9.13, and a qualified returned substitute check shall be encoded in accordance with ANS X9.100-140.
- (b) **Expeditious return of checks.**
  - (1) Except as provided in [paragraph (c)](#c) of this section, a returning bank shall return a returned check in an expeditious manner such that the check would normally be received by the depositary bank not later than 2 p.m. (local time of the depositary bank) on the second business day following the banking day on which the check was presented to the paying bank.
  - (2) If the second business day following the banking day on which the check was presented to the paying bank is not a banking day for the depositary bank, the returning bank satisfies the expeditious return requirement if it sends the returned check in a manner such that the depositary bank would normally receive the returned check not later than 2 p.m. (local time of the depositary bank) on the depositary bank's next banking day.
- (c) **Exceptions to the expeditious return of checks.** The expeditious return requirement of [paragraph (b)](#b) of this section does not apply if—
  - (1) The check is deposited in a depositary bank that is not subject to subpart B of this part;
  - (2) A paying bank is unable to identify the depositary bank with respect to the check; or
  - (3) The bank handles a misrouted returned check pursuant to [§ 229.33(f)](/cfr/12/229.33.md?p=f).
- (d) **Notice in Lieu of Return.** If a check is unavailable for return, the returning bank may send in its place a copy of the front and back of the returned check, or, if no such copy is available, a written notice of nonpayment containing the information specified in [§ 229.31(c)](/cfr/12/229.31.md?p=c). The copy or written notice shall clearly state that it constitutes a notice in lieu of return. A notice in lieu of return is considered a returned check subject to the requirements of this section and the other requirements of this subpart.
- (e) **Settlement.** A returning bank shall settle with a bank sending a returned check to it for return by the same means that it settles or would settle with the sending bank for a check received for forward collection drawn on the depositary bank. This settlement is final when made.
- (f) **Charges.** A returning bank may impose a charge on a bank sending a returned check for handling the returned check.
- (g) **Reliance on routing number.** A returning bank may return a returned check based on any routing number designating the depositary bank appearing on the returned check in the depositary bank's indorsement or in magnetic ink on a qualified returned check.

## Notes

### Amendments

[82 FR 27580, June 15, 2017]

### Authority

Authority: 12 U.S.C. 4001-4010, 12 U.S.C. 5001-5018.

### Source

Source: 53 FR 19433, May 27, 1988, unless otherwise noted.

### Amendments

[82 FR 27580, June 15, 2017]