New Cheque Bounce Laws in Nepal (2082): Complete Guide to Banking Offense Act

The Shift in Banking Offense Laws

In a move to strengthen financial discipline and streamline legal procedures, Nepal has implemented significant amendments to the Banking Offenses and Punishment Act, effective from 2082 B.S. (2025 A.D.). The most critical change is the repeal of Section 107(A) of the Negotiable Instruments Act, 2034, making the Banking Offense Act the sole governing law for cheque dishonor cases.

This shift means “Cheque Bounce” is no longer just a civil dispute—it is treated with the severity of a state-prosecuted criminal offense.

Key Changes at a Glance

1. Police Filing is Mandatory: You can no longer file directly in court. All complaints must go through the Nepal Police.
2. 45-Day Notice Rule: Before filing a complaint, you must give the issuer a 45-day written notice to settle the debt.
3. Strict Limitation Period: You have only 1 year to file a police complaint from the date of the offense.

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The New Procedure: Step-by-Step

If you are holding a bounced cheque, here is the new mandatory legal pathway:

Step 1: The 45-Day Notice

Upon the cheque being dishonored by the bank (due to insufficient funds or signature mismatch), you cannot immediately go to the police.

• Requirement: You must send a formal written notice to the issuer giving them 45 days to deposit the amount.
• Bank’s Role: Financial institutions are now mandated to assist in informing the account holder and keeping a record of this communication.

Step 2: Filing a Police Complaint (Jaheri)

If the money is not deposited within the 45-day window, you must file a First Information Report (FIR/Jaheri) with the police.

• Timeline: This must be done within 1 year of the cheque bounce.
• Investigation: The police will investigate the claim, a process that was previously bypassed in direct court filings.

Step 3: Government Prosecution

Once the investigation is complete, the District Attorney’s Office will file the case in the District Court. The case becomes Government of Nepal vs. The Defendant.

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New Penalty Structure (Imprisonment Tiers)

The amendment introduces a tiered system for imprisonment based on the amount of the bounced cheque. This ensures proportionality in punishment.

Cheque Amount	Imprisonment Term
Up to NPR 15 Lakhs	Up to 1 Month
NPR 15 Lakhs - 50 Lakhs	1 Month to 3 Months
NPR 50 Lakhs - 1 Crore	3 Months to 1 Year
NPR 1 Crore - 10 Crores	1 Year to 2 Years
Above NPR 10 Crores	2 Years to 4 Years

Fines & Compensation

In addition to jail time, the court will order the offender to pay:

1. Principal Amount: The strict value of the cheque.
2. 5% Penalty: An additional fine goes to the state.
3. Interest: Legal interest on the amount for the delayed period.

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Why This Matters for Businesses

For corporate houses and traders in Nepal, this amendment brings both relief and caution.

• For Creditors: Recourse is now stronger. The threat of state prosecution and jail time is a powerful deterrent against issuing bad cheques. However, the process is slightly longer due to the mandatory notice period.
• For Debtors: Issuing a cheque without funds is now a direct path to criminal conviction. The “civil loophole” is closed.

Reconciliation is Possible

A welcome addition to the law is the formal recognition of reconciliation (Milapatra). Even after a police complaint or court case is filed, if the parties agree and the money is paid, the case can be settled. This saves time for both the judicial system and the parties involved.

Conclusion

The Banking Offense and Punishment (Second Amendment) Act 2082 is a game-changer. It prioritizes the recovery of funds and penalizes financial negligence. Whether you are a business owner, landlord, or individual lender, understanding these new timelines and tiers is essential to protecting your financial interests in Nepal.

Disclaimer: This article provides a general overview of the Banking Offense Act updates. For specific case guidance, Consult with our specialized banking law attorneys.