Cheque dishonour for insufficient funds in Nepal is governed by the Banking Offence and Punishment Act, 2064, as amended by the Second Amendment Act, 2082. The amendment introduced a bank notice and certification process, revised the complaint deadline and penalties, and provided for settlement.
Editorial correction — 11 September 2026: the previous version incorrectly said the Act had never been amended and included outdated procedure, deadline, penalty and interest statements. This version follows the official Second Amendment Act, authenticated on 2082/01/24. This is a source-based editorial correction, not a claim of individual advocate verification.
What counts as cheque dishonour?
A bank can return a cheque for several reasons, including a signature problem or insufficient funds. These reasons should not be treated as legally identical. Under amended section 2(ठ), the cheque-dishonour definition concerns insufficient funds and certification by the bank, financial institution or cooperative bank under section 3क(5). Ask the bank to record the actual reason for return.
Bank notice and certification procedure
- Present the cheque for payment. If the account lacks sufficient funds, the bank returns it to the holder. Section 3क(2).
- If the holder wants certification of dishonour, the bank must notify the account holder to deposit sufficient funds, allowing up to 45 days from the relevant presentation of the cheque. It must record the notice, note this on the cheque and return the cheque to the holder. Section 3क(3)–(4).
- After the notice period expires, present the cheque again for payment. If payment still cannot be made because of insufficient funds, the bank must certify dishonour within three days and return the cheque to the holder. Section 3क(5).
Keep the cheque and the bank’s written records of presentation, notice and certification. Section 3क(7) provides for the certification procedure to be determined by Nepal Rastra Bank; ask the bank about its current prescribed process.
The amended section does not impose a blanket requirement that a cheque must bounce three times. Follow the notice and certification process, rather than counting informal attempts to cash the cheque.
Source: Second Amendment Act, section 4, inserting section 3क (PDF pages 3–4)
Complaint deadline and the court
For an offence under section 3क, amended section 17(1क) allows the complaint (jaheri/FIR) within one year of the date dishonour is certified. It requires the case to be filed before the concerned District Court within six months of that complaint. These are separate periods; the six-month court-filing period is not extra time to lodge the complaint.
The starting point stated in this cheque-specific provision is the certification date, not simply the cheque’s issue date or its first return. Have the dated bank records checked promptly when deciding the filing deadline. This guide does not calculate a deadline for an individual case.
Source: Second Amendment Act, section 8, inserting section 17(1क) (PDF page 6)
Recovery, interest and penalties
For dishonour certified under section 3क(5), section 15(1क) provides for recovery from the cheque-issuing account holder of the cheque amount and interest under prevailing law from the cheque’s issue date until recovery. It also provides for a fine of 5% of the amount and the following imprisonment bands. The fine is distinct from the holder’s recovery.
Cheque amount | Imprisonment under section 15(1क) |
|---|---|
Up to NPR 15 lakh (1,500,000) | Up to one month |
Above NPR 15 lakh and up to NPR 50 lakh (5,000,000) | One to three months |
Above NPR 50 lakh and up to NPR 1 crore (10,000,000) | Three months to one year |
Above NPR 1 crore and up to NPR 10 crore (100,000,000) | One to two years |
Above NPR 10 crore | Two to four years |
These are statutory provisions for this cheque-dishonour offence, not a prediction of the sentence or recovery in any particular case.
Source: Second Amendment Act, section 7, inserting section 15(1क) (PDF pages 5–6)
Can a cheque-dishonour case be settled?
Section 26क allows settlement where the defendant pays the cheque amount to the holder and both parties wish to settle. During investigation, the application proceeds through the investigating officer to the government attorney. After a case has been filed, the application proceeds through the government attorney to the court. The provision requires formal handling and recording; a private payment alone should not be assumed to close an existing case.
Source: Second Amendment Act, section 10, inserting section 26क (PDF pages 7–8)
What happened to the old Negotiable Instruments Act remedy?
Section 12 of the Second Amendment Act repealed section 107क of the Negotiable Instruments Act, 2034. It also preserves proceedings in cases already filed seeking punishment under that section when the amendment commenced. The amendment states that it commenced immediately.
The old section 107क penalty should therefore not be presented as an unchanged, parallel route for every new cheque-dishonour complaint. For an older transaction or pending case, the filing history and applicable transitional rules need individual assessment. This correction does not state that every other contractual or civil claim has been abolished.
Source: Second Amendment Act, sections 1 and 12 (PDF pages 1 and 8)
Records to prepare
For a discussion with the bank or a lawyer, organise the original cheque, return memo, notice and certification records, relevant transaction evidence and any payment or settlement records. If proceedings have started, include the complaint and case documents. This is a preparation checklist, not a statutory list of filing requirements.
Related reading: Blacklisting Process in Nepal
Frequently asked questions
Does the amended law allow interest?
Yes. Section 15(1क) expressly provides for interest under prevailing law from the cheque’s issue date until recovery. The previous statement that the Banking Offence Act does not provide interest was incorrect.
Is the first bank return enough to establish the amended offence?
The statutory definition refers to certification under section 3क(5). Distinguish a return memo from the notice and certification process, and have the bank’s records checked.
Should a new case be filed in the High Court under the old guide?
The cheque-specific section 17(1क) identifies the concerned District Court for filing the case after the complaint. The previous High Court charge-sheet instruction should not be used for this amended procedure.
This article provides general legal information. Case-specific advice requires review of the cheque, bank records, relevant dates and any existing proceedings. The official Nepali statute is the source for the English summary above.
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