KATHMANDU, May 9: The government has implemented an amendment to the Banking Offense and Punishment Act, 2064 BS, with significant changes in the process and penalty for check dishonor cases.
The amended Act, published in the Nepal Gazette and effective from May 8, shortens the statute of limitation for filing a complaint from five years to one year and mandates that police authorities investigate such cases instead of the previous practice where victims had to directly approach the court. As per the amendment, after receiving the complaint, police must complete the investigation and file the case in the district court within six months.
Previously, victims could file check bounce cases within five years, and there was no provision for mandatory police investigation. With the new changes, check dishonor has been categorized as a banking offense under the Act. The revised law introduces a tiered penalty structure based on the amount stated in the dishonored check. If the check amount is up to Rs 1.5 million, the defaulter can face a jail term of up to one month. If the amount is between Rs 1.5 million and Rs 5 million, the punishment can range from one to three months in prison. For checks amounting to Rs 5 million to Rs 10 million, the defaulter may be sentenced to one year in jail. If the value is between Rs 10 million to Rs 100 million, the defaulter can be imprisoned for two years, and for check amounts exceeding Rs 100 million, the sentence ranges from two to four years.
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In addition to the jail sentence, the convicted individual must also pay the full amount of the check, interest calculated from the check issuance date, and an additional five percent penalty. The amendment also includes a provision for case settlement at any stage of the judicial process, including after the case has been filed in court. Banks are required to provide a 45-day period before initiating legal proceedings against the defaulter, giving the individual an opportunity to deposit the outstanding amount.
Despite these revisions, the law has drawn criticism from legal experts for its failure to address ongoing or pending check bounce cases that were valid under the previous five-year limitation. The High Court Bar Association, Biratnagar, has publicly objected to the new law, stating that it could violate the constitutional right to justice for complainants who had filed cases within the five-year timeframe. They argue that the new statute of limitation restricts victims' access to legal remedies and raises concerns that the amendment might serve the interests of certain individuals or groups, thereby weakening public trust in the judicial process.
The Bar Association has urged lawmakers to ensure that the right to seek legal remedy is not denied to any citizen. They emphasized that although revising laws is a legislative right, the process should be inclusive and just, and it should not invalidate the cases already filed under the old provisions. Meanwhile, Nepal Police officials have acknowledged the additional burden this amendment might place on their system and indicated that they may need additional human resources to investigate and handle check bounce complaints within the newly prescribed timeline.
