Nepal Cheque Bounce Law Amendment: Banking Offenses Act, Police Investigation, Time Limit Change
10th May 2025, Kathmandu
The government has introduced major reforms in cheque bounce cases through amendments to the Banking Offenses and Punishment Act, 2064. These changes came into effect from Wednesday, following their publication in the Nepal Gazette.
Nepal Cheque Bounce Law Amendment
Cheque Bounce No Longer a Civil Offense
Previously, individuals could file cheque bounce cases directly in court under the Negotiable Instruments Act, 2034. However, that option has been revoked. Clause 107(k) of the Act, which allowed legal action if there were insufficient funds in an account, has been repealed.
Now, only the police can investigate cheque bounce offenses. The process must begin with a formal complaint filed at the police station.
Time Limit and Filing Procedures Revised
Under the amended law, the statute of limitations has changed. Complainants must file a police report within one year from the date the cheque is dishonored. After that, police must register the case in court within six months of the complaint.
This ends the previous five-year limitation period under the old law, leaving many unresolved cases in legal limbo.
Five-Year Limit Cancelled Without Provision for Pending Cases
Legal experts and advocates have raised concerns about this change. According to the High Court Bar Association in Biratnagar, thousands of people were waiting for legal action under the old five-year deadline.
Bar Secretary Binod Timilsina stated that the new law does not address pending cases. As a result, many individuals seeking justice are now left without legal options. The Bar has urged authorities to reconsider this and ensure legal remedies for those cases.
New 45-Day Notification Rule for Banks
One of the major changes in the new law is the role of banks in the cheque bounce process. If there are insufficient funds in an account, banks must now provide the account holder with a 45-day notice to deposit the required amount.
Banks must also keep records of this notice. If the account holder fails to deposit the funds within that period, the bank must return the cheque to the bearer with proof of dishonor within three days.
This change shifts some responsibilities from the cheque holder to the bank, ensuring better documentation and communication.
Fines and Jail Time Based on Cheque Amount
The amendment also introduces a tiered punishment system. Penalties now depend on the amount mentioned in the cheque:
For up to NPR 15 lakh: one-month jail term
From NPR 15 to 50 lakh: three-month jail term
From NPR 50 lakh to 1 crore: one-year jail term
From NPR 1 to 10 crore: two-year jail term
Above NPR 10 crore: up to four years in jail
In addition to imprisonment, the drawer of the bounced cheque must also repay the principal amount with interest, plus a 5% penalty.
Mandatory Settlement Attempts Included
Previously, settlements were handled under the Criminal Procedure Code. The new amendment includes provisions for out-of-court settlements directly in the Banking Offenses Act. This formalizes reconciliation efforts and could reduce the burden on courts.
No Clause to Verify Source of Funds
Notably, the revised law does not require banks or cheque holders to investigate the source of funds stated in the cheque. This omission has raised eyebrows among legal circles.
Nepal Rastra Bank to Set Guidelines
The central bank will prepare specific guidelines regarding cheque dishonor. This will include documentation requirements, handling procedures, and the roles of banks and financial institutions.
Legal Community Demands Review
Lawyers and bar associations argue that the changes unfairly impact people who were relying on the previous five-year limitation. According to the High Court Bar Association, the sudden removal of this legal right without transitional provisions violates the citizens’ right to property and legal remedies.
They warn that the amendment benefits only a select group and harms ordinary citizens. The Bar has asked for the law to be revised, especially to protect those with pending cheque cases under the old rule.
Conclusion
The amended law streamlines cheque bounce procedures and seeks to reduce frivolous legal claims. However, it also brings new challenges for individuals who had filed or planned to file cases under the older legal framework. As debate continues, all eyes are on lawmakers and enforcement bodies for possible revisions or clarifications.
For more: Nepal Cheque Bounce Law Amendment
