Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: A revised law governing cheque bounce offenses came into effect on Wednesday, introducing significant changes to the investigation, prosecution, and penalties under the Banking Offense and Punishment Act, 2064. Published in the Nepal Gazette, the amended act transfers sole authority for handling cheque bounce cases to the police, streamlining procedures and eliminating previous provisions that allowed direct court filings.
Under the new law, the police will exclusively investigate and process cheque bounce cases, repealing Section 107(ka) of the Negotiable Instruments Act, 2034, which previously permitted direct court complaints and set penalties for insufficient funds.
The repeal addresses the issue of dual legal frameworks for the same offense, unifying all cases under the Banking Offense Act. However, legal experts warn that the shift to police-led investigations could increase the backlog, as cheque bounce cases already dominate police workloads.
The amended act shortens the statute of limitations for filing complaints. Previously, bounced cheques could be actionable for five years under the Negotiable Instruments Act. Now, complaints must be filed with the police within one year of the cheque being dishonored, and cases must reach the district court within six months of the complaint, as stipulated in Section 17 of the act.
New Process for Cheque Bounce:
Banks must now notify account holders to deposit sufficient funds within 45 days if a cheque cannot be honored due to insufficient funds. If the funds are not deposited, the bank will certify the cheque as dishonored within three days and return it to the payee. The Nepal Rastra Bank will establish detailed guidelines for this process. Reduced Fines, Scaled Penalties:
The revised law reduces fines from 100% of the cheque amount to 5%, with imprisonment penalties based on the amount involved:
Up to NPR 1.5 million: One month imprisonment. NPR 1.5 million to 5 million: Three months. NPR 5 million to 10 million: One year. NPR 10 million to 100 million: Two years. Over NPR 100 million: Four years.
The act also formalizes provisions for out-of-court settlements, previously governed by the Muluki Criminal Procedure Code, allowing parties to resolve disputes amicably. However, it does not mandate verifying the source of funds for bounced cheques.
Senior Advocate Kedar Koirala, General Secretary of the Nepal Bar Association, welcomed the changes but noted areas for improvement. “The reduction in fines is fair, as the previous 100% penalty was excessive,” he said. “However, requiring verification of the cheque amount’s source would have strengthened the law further.”
The new provisions aim to enhance efficiency and fairness in handling cheque bounce cases, but concerns remain about potential delays due to increased police responsibilities.
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