The May 2025 amendment rewrote cheque-bounce law: 45-day cure notices, police-only investigation, graded jail to four years, and compromise that erases punishment. The complete guide for holders and drawers.
Cheque dishonour is Nepal's highest-volume criminal complaint — tens of thousands yearly. For years the law favoured holders absolutely: a bounced cheque meant a police complaint with no chance to cure errors, flooding the justice system and punishing genuine cash-flow crises as crimes. The Banking Offence and Punishment (Second Amendment) Act of May 2025 rebalanced the regime, and both sides must now play by new procedure.
The new 45-day cure cycle
When a bank finds insufficient funds, it returns the cheque. If the holder seeks certification, the bank must notify the drawer to deposit funds within a maximum of 45 days, record that notice, and endorse the fact on the cheque itself. The drawer who pays within 45 days — and withdraws the instrument — faces no case at all. Only if dishonour persists does the bank certify within 3 days of re-presentation, unlocking criminal remedy. Nepal Rastra Bank issues uniform operating guidelines for the cycle.
Investigation and forum changes
Only police may now investigate cheque cases and initiate proceedings — individuals can no longer file directly in court. The complaint must reach police within one year of certification, and the case must reach the District Court within six months of complaint. Overlapping punishment under the old Negotiable Instruments Act provision stands repealed, ending double-track exposure.
Graded punishment, full recovery
On conviction the drawer pays the full cheque amount with interest from issuance, plus a 5% fine — and graded imprisonment: up to 1 month (≤ NPR 15 lakh), 1–3 months (≤ NPR 50 lakh), 3 months–1 year (≤ NPR 1 crore), 1–2 years (≤ NPR 10 crore), and 2–4 years above NPR 10 crore. Victims thus recover principal, interest and a fine kicker in one judgment.
Compromise ends everything
New Section 26A formalises settlement: pay the cheque amount, apply jointly for compromise through the government attorney during investigation (or the court after filing), and on execution of the deed the defendant faces no punishment under the Act. This single provision resolves the majority of commercially sensible cases.
Beyond cheques: the wider Act
The same statute criminalises false-document accounts, unauthorised withdrawals and transfers, card and ATM abuse, loan and valuation fraud — with amount-graded 1–5 year sentences, recovery of claimed sums, executive liability where organisations offend, and half-tariff for attempters and abettors. Obstructing investigation itself draws up to 6 months.
Practical guidance
Holders: present promptly, demand the 45-day notice record, diary the 1-year and 6-month limits per instrument, and keep compromise leverage alive. Drawers: treat the bank's notice as a final warning — pay within 45 days, or negotiate a Section 26A compromise the moment a complaint lands. Both sides should preserve the cheque, memos and notices as a complete set.
Key takeaways
- 45-day cure notice before any criminal case can start
- Police-only investigation; 1-yr complaint and 6-mo filing limits
- Full amount + interest + 5% fine; graded jail 1 mo → 4 yrs
- Section 26A compromise after payment erases all punishment
General information for public awareness — not legal advice for your specific situation. Consult an advocate →
Frequently asked questions
My cheque bounced yesterday. Can I file a police complaint today?
Not yet — the 45-day cure cycle must run first. Ask the bank for return documentation and certification procedure, and diary the 1-year complaint limit from certification.
I issued the cheque and cannot pay in 45 days. Options?
Negotiate payment with the holder and record a Section 26A compromise — available during investigation and after filing — which extinguishes criminal liability on execution.
Do old Negotiable Instruments Act cheque cases still run?
Cases already filed under the repealed provision continue under it; new dishonour cases proceed exclusively under the amended Banking Offence Act.
References
- Banking Offence and Punishment (Second Amendment) Act, May 2025 — cheque procedure, slabs, Sec. 26A
- Banking Offence and Punishment Act, 2064, Secs. 3–3A, 15 — Nepal Rastra Bank / Law Commission
- Nepal Rastra Bank operational guidelines on dishonour certification
Verify current wording and commencement at the Nepal Law Commission (lawcommission.gov.np) before relying on any provision. Reviewed by a Nepal-qualified advocate in October 2026.