New Law: government to handle all check bounce cases, jail terms increased

KATHMANDU:  In a major legislative change, all cases related to check bounce (dishonored checks) will now be handled as government cases, according to a new amendment to the *Banking Offenses and Punishment Act, 2064*. Previously, some check bounce cases were handled as government cases, while others fell under criminal offenses. This amendment, proposed by the Finance Committee of the Parliament, seeks to streamline all check bounce cases under the government’s jurisdiction.

Finance Committee Chairperson Santosh Chalise confirmed the change, stating, “From now on, all check bounce cases will be government-led, and they will no longer fall under criminal offenses.” In government-led cases, the government attorney will represent the cases. The amended bill, titled *Banking Offenses and Punishment (Amendment) Bill, 2080*, was approved by the committee with modifications.

Chalise highlighted the growing number of check bounce victims, with over 18,000 cases reported so far, and an increase of around 10,000 victims annually. “Our goal is to reduce the number of cases. We want to allow up to three months for reconciliation before formal proceedings begin. If no funds are deposited in the account within 30 days, the banking offense process will commence. After three months, the offense will be considered a crime,” Chalise added.

New Provisions for Check Bounce Cases

Under the revised law, bank employees will now be required to notify account holders immediately if there are insufficient funds when a check is first presented. “The employee will notify the account holder to deposit funds within 30 days. If the funds are not deposited within three months, the check bounce process will proceed,” Chalise said, adding that the current practice of not providing such information would be rectified.

The Finance Committee has also agreed that for check bounce cases involving amounts above NPR 100 million, offenders could face a jail term of two to four years. Earlier discussions in the committee had set penalties based on the bounced amount: one month for up to NPR 1.5 million, one to three months for amounts between NPR 1.5 million and NPR 5 million, three months to one year for amounts between NPR 5 million and NPR 10 million, and two years for amounts above NPR 10 million. Monday’s meeting increased the jail term to four years for cases involving amounts above NPR 100 million.

In August 2023, the Cabinet approved the draft amendment bill, which was later tabled in the House of Representatives by then-Finance Minister Prakash Sharan Mahat on October 16, 2080 BS.

Uniform Legal Framework

The amendment was driven by a Supreme Court order and a study by the Office of the Attorney General, both of which highlighted the need for uniform legal procedures for check bounce cases. The amendment aims to eliminate discrepancies in the legal treatment of such cases.

The bill also explicitly prohibits individuals from issuing checks without sufficient funds in their accounts. “No one shall issue a check or request payment from a bank if they know that their account has insufficient funds,” the bill states.

Banks and financial institutions will be required to return dishonored checks to the holder and notify the account holder to deposit the necessary funds within 30 days. If no funds are deposited within this period, the check bounce process will proceed.

The amended bill will be presented in the House of Representatives on Tuesday for further deliberation.