NRB moves to phase down cheque use as bounce cases push thousands into blacklist

KATHMANDU: Alarmed by a sharp rise in people being blacklisted due primarily to cheque dishonour, Nepal Rastra Bank has adopted a policy to gradually reduce cheque usage and shift transactions toward digital payment systems.

The move was highlighted in the mid-year review of the monetary policy for the current fiscal year 2025/26 (2082/83 BS), where the central bank stated it will limit cheque-based transactions while prioritizing electronic payments.

Governor Bishwo Poudel said the decision was driven by the growing number of individuals falling into the credit blacklist not due to loan default, but because of bounced cheques — a trend he warned is creating widespread psychological and financial stress.

Cheque Dishonour Driving Blacklist Surge

Data from the country’s credit registry show the blacklist has expanded dramatically in recent years. According to Credit Information Center Nepal, the number of blacklisted individuals rose from around 16,000 in 2020 to roughly 129,000 by FY 2024/25.

Of those cases, about 64 percent were linked to cheque dishonour, while only around 35 percent resulted from failure to repay loans.

Officials say the figures reveal that procedural financial penalties tied to cheque transactions have become a major pathway into financial exclusion, often affecting traders, small entrepreneurs, and salaried individuals rather than large defaulters.

Policy to Limit Cheque Transactions

The central bank’s review states that transaction limits will be set for cheque payments while digital channels will be prioritized. Since transactions above Rs 2 million can already be processed through Real Time Gross Settlement (RTGS), authorities see little justification for continued heavy reliance on cheques.

Governor Poudel argued that in today’s banking system — where balances can be verified instantly in real time — cheques have become outdated and unnecessarily risky instruments.

He stressed that reducing cheque usage would not only modernize the payment ecosystem but also prevent thousands from falling into the “blacklist trap.”

Long-Term Goal: Shift to Fully Digital Payments

The central bank has signaled that the policy is not just about limiting cheques but about gradually replacing them with digital transactions altogether.

Officials say the strategy is aligned with Nepal’s broader push toward a digital financial system that improves transparency, reduces fraud risks, and lowers transaction costs.

Bankers expect the transition to accelerate adoption of mobile banking, interbank digital transfers, and institutional payment gateways, particularly in wholesale trade and corporate transactions where cheque use remains common.

Blacklist Rules Also Adjusted

Alongside the shift away from cheques, the monetary policy review has introduced changes to blacklist procedures.

Borrowers unable to repay loans immediately due to situational constraints will not be automatically blacklisted. In addition, those already on the blacklist may be temporarily removed for up to six months if they present valid reasons and begin repayment arrangements, allowing banks to recover dues without permanently excluding borrowers from the financial system.

Financial System Reform Signal

Analysts say the combined measures — reducing cheque reliance while softening blacklist provisions — indicate a shift toward a more modern and recovery-oriented financial framework.

They note that while the transition could face resistance from traditional business communities accustomed to cheque payments, the long-term impact could be a more transparent, faster, and digitally integrated banking system.