Cheque dishonour complaints overwhelm Police, fueling systemic strain

KATHMANDU: The number of individuals and firms being blacklisted due to cheque bounce has continued to rise, even after the government and Nepal Rastra Bank (NRB) relaxed legal provisions to prevent disruption in financial transactions. Although the existing law allows additional time for cheque issuers to settle dues and avoid criminal cases, the number of cheque-related defaults has increased rather than declined.

Through the second amendment to the Banking Offences and Punishment Act, 2064, the government had introduced a provision prohibiting the issuance of cheques without sufficient balance in the account. The law requires banks and financial institutions to notify the account holder and provide up to 45 days to deposit the required amount once a cheque bounces. If the issuer pays the cheque holder at any point, the case does not need to proceed to court.

However, data from the Credit Information Bureau indicate that the number of blacklisted persons and companies has sharply increased. As of Kartik 13, a total of 13,674 individuals and firms have been placed on the blacklist. Of these, 6,436 were blacklisted between the start of the fiscal year (mid-April) and Kartik 13 alone. Until Baisakh 2, the total number of blacklisted entities stood at just 7,238.

Officials say the intended relief measures have not helped reduce banking offence complaints and blacklisting cases. “Around 80 percent of blacklisting cases are related to cheque bounce,” an official at the Credit Information Bureau said. “Although the law was amended to encourage settlement outside court, cheque bounce cases are increasing instead of decreasing.” The official attributed the rise to the post-pandemic slowdown, cooperative sector distress, microfinance repayment pressure, and overall economic downturn.

Nepal Police records also show a high volume of banking offence complaints. In FY 2081/82 alone, more than 16,500 banking offence cases were registered nationwide, the majority of them involving cheque dishonour. Police officials say significant manpower is being mobilized to handle cheque bounce-related complaints, often diverting focus from regular policing duties. Many complainants prefer filing applications through police as blacklisting the issuer puts pressure for faster settlement.

Despite NRB repeatedly easing blacklist-related rules to prevent economic disruptions during periods of low liquidity and financial stress, cheque bounce-linked blacklisting continues to rise. Once blacklisted, individuals and firms are barred from most banking services except depositing money into their accounts, which creates wider financial complications across supply chains and transactions.

Meanwhile, under the Cheque Dishonour Certification Procedure, 2082, banks must verify and certify cheque dishonour if insufficient funds exist in the issuer’s account. After certification, the cheque holder may request the issuer be blacklisted. NRB directives also state that borrowers who fail to repay loans above Rs 1 million for more than one year, misuse collateral, disappear, or are convicted of financial fraud must be blacklisted.

Financial analysts warn that increasing cheque bounce cases reflect underlying stress in the economy and liquidity chain disruptions, with growing risks of defaults spreading across banking, cooperative, and enterprise sectors.