KATHMANDU, Oct 18: A proposed amendment to the Banking Offenses and Punishment Act, aimed at imposing severe penalties for check bouncers, has been introduced to the Federal Parliament. The amendment bill, registered in the House of Representatives, includes provisions for up to two years of imprisonment in cases of check bouncing.
Under the new bill, if the check is proven to have bounced, the account holder who issued the check will be fined five percent of the amount and s/he must pay the owed amount to the recipient within a specified time frame. Failure to comply with this requirement may lead to imprisonment. Imprisonment for up to one month has been proposed for defaults up to Rs 500,000, up to three months for defaults up to Rs 1,000,000, six months for defaults up to Rs 5,000,000, and up to two years for defaults above Rs 5,000,000.
According to the bill, if the check is not in the specified amount, the bank or financial institution must return the check to the person to whom the check is issued. If the person who has the right to receive the payment of the returned check amount wants to take action against the issuer for the bounced check, the bank has to give the issuer a maximum of 30 days to deposit the required amount in his account and keep a record of the transaction.
After the bank keeps a record of the information given to the account holder, it should also be mentioned in the check itself and returned to the intended recipient.
Complaints can be filed within three months from the date of check bounce. According to the provisions in the bill, a case should be filed before the relevant district court within three months from the date of such complaint. Similarly, there are provisions that the defendant can submit an application to the person who is entitled to receive the amount mentioned in the check, if both parties want an out-of-court settlement. There is a provision in the bill that the court should facilitate such settlements.
An amendment to the Banking Offenses and Punishment Act, originally enacted in 2064 BS, was first introduced in 2073 BS. This earlier amendment made deliberate issuance of a check without sufficient funds in the account a banking offense and imposed a fine and imprisonment of up to three months for check bouncers.
In recent times, fraudulent activities involving false statements and money transfers in banks and financial institutions have seen a notable increase. Numerous related cases are currently pending at various courts. The government has introduced this bill to address these challenges, ensuring a comprehensive legal framework for investigating, prosecuting, and addressing check bounce cases under the Banking Offenses and Punishment Act of 2064 BS.
According to the government, a bill amending the Banking Offenses and Punishment Act, 2064 BS has been introduced to parliament because the provisions related to bounced checks in the Banking Offenses and Punishment Act, 2064 BS and other related legislations should be amended.