Limitation cut from 5 years to 1. Fines slashed. Jail term now based on cheque amount. Did Nepal’s cheque bounce law just let defaulters off the hook? Here's what you need to know.

Imagine you were promised money through a cheque. You trusted the system, waited patiently, even gave the person time to repay. You knew that if things went south, the law gave you five full years to file a complaint and get justice.

But now, in 2082, the law has changed. And suddenly, your patience? Punished. Your right? Revoked.

On 24th Baisakh 2082, the Government of Nepal made a major amendment to the Banking Offence and Punishment Act 2064. With this amendment, the way cheque bounce cases are handled in Nepal has completely changed.

It scrapped the old system where victims had two different legal routes; civil or criminal, to recover their money. Now, there’s only one way: the criminal route. And it’s full of deadlines, strict procedures, and shorter timelines.

The intention behind this change was to stop cheque misuse and make legal action more efficient. But in trying to fix one problem, the law created another. Thousands of people who were depending on the old system suddenly found themselves with no way to file their case anymore. Because the statute of limitations i.e. the time period when you can initiate the legal action has been reduced from 5 years to 1 year! Yes, you read it right. 

So, what exactly changed? And why are so many calling it unfair? Let’s break it down.

The Two Ways People Could File Cheque Bounce Cases (Before the Amendment)

Until recently, Nepal had what you might call a “dual-track system” when it came to cheque bounce cases. That meant if someone gave you a cheque that bounced because they didn’t have enough money in their account, you had two choices:

1. The Civil Route Under the Negotiable Instruments Act, 2034

This was the more flexible, user-friendly route for most people.

Here’s how it worked:

• If someone gave you a cheque that bounced, you could go directly to the court and file a case.
• You didn’t need to go to the police or prove criminal intent.
• The focus here wasn’t on putting people behind bars. It was about helping you get your money back.
• The law gave you five full years to file the case. That’s a long time, helpful if you were trying to settle things outside of court first.
• The punishment? A maximum of 3 months in jail or a Rs. 3,000 fine for the person who issued the bad cheque.

This route was especially useful for small business owners, individuals, or anyone who wanted compensation, not confrontation.

2. The Criminal Route Under the Banking Offence and Punishment Act, 2064

If a bounced cheque involved a large amount or looked like fraud, you had the option to take the criminal route under the Banking Offence and Punishment Act, 2064.

Here’s how it worked:

• You had to go to the police first, no direct court access.
• The focus wasn’t just on recovering money, it was on punishing wrongdoing.
• This route was mainly used by banks and big businesses, not everyday people.

Why? Because for most, the process was intimidating and complicated.

Here’s what really happens:

First, the Police Wait

After you file a complaint, the police usually wait a week or so to see if you and the issuer can settle the matter. They don’t act immediately.

Then, You Do the Chasing

If things don’t resolve, the police don’t go hunting the offender.
You have to give them the person’s location (address, phone number, maybe even workplace.)

No info? No follow-up.

If Found, They’re Detained

If the police find the person, they’re often detained for investigation (for up to 21 days.)
For many victims, that feels too harsh, especially when they just want their money, not to jail someone they know.

Why Most People Chose the Civil Route Instead

The civil route was faster, easier, and didn’t involve police or detention.
That’s why most individuals and small businesses avoided the criminal path.Iit was too much hassle for too little return.

But now? That civil option is gone.
No matter the cheque amount, you’re stuck with the criminal route.

Why This Dual System Worked

It gave you choices.
Let’s say your client’s cheque for Rs. 2 lakh bounced. You might prefer to give them time, and if things didn’t work out, file a civil case. No stress, no police.
But if someone gave you a fake cheque worth Rs. 2 crore? You’d probably want the criminal route.

This system respected your situation and intent. But now? That flexibility is gone.

Oh, and There Was Another Option Too: Blacklisting

Many people don’t know this, but there was a third, less talked-about path, especially used by banks, cooperatives, and even some government offices: blacklisting.

Here’s how it worked:

• If someone’s cheque bounced, especially repeatedly, you could report them to the bank or central authorities.
• Once blacklisted, that person could face account restrictions, lose access to credit, and even have trouble opening new accounts.
• Some government agencies wouldn’t even process tenders or payments for blacklisted parties.
• It was an administrative penalty, not a legal case, but it still had consequences.

This was often used when you didn’t want to go to court but still wanted to warn others or create pressure.

But even this system relied on cooperation from banks or regulators, and it didn’t offer compensation, just accountability.

Now let’s look at the key amendments that made this shift so drastic.

Key Amendments Made: Before vs. After

So, what exactly did the 2082 amendment change in the Banking Offence and Punishment Act 2064? Let’s walk through it step by step, because this is where things start to get serious.

The amendment didn’t just tweak the system. It completely changed the way cheque bounce cases work in Nepal. If you thought you still had that 5-year window or could directly knock on the court’s door, you’ll be shocked.

Let’s break it down:

1. Civil Route Removed: No More Dual-Track Access

Before:

You could choose whether to file your case through the police (criminal route) or go directly to court (civil route) under Section 107(a) of the Negotiable Instruments Act 2034.

After:

The civil option is gone.
You must go through the police first, no matter what.

That means:

• No more direct access to courts
• No more 5-year timeline
• No more flexibility based on your situation

This is because Section 107(a) of the Negotiable Instruments Act 2034, the very law that allowed civil filing has been repealed.

Increased Jail Time: From a Flat 3 Months to Up to 4 Years

Let’s say someone gave you a cheque worth Rs. 50 lakh, and it bounced.

Before the amendment, no matter how big the cheque was, the worst that could happen to the defaulter under the civil route was up to 3 months in jail. That’s it. Even if the cheque was worth crores.

But now? Things have changed.

Since the civil route has been scrapped, and only the criminal route remains, the punishment is no longer one-size-fits-all. It now depends on the amount involved, and the jail time increases as the cheque value goes up.

Here’s how the new system works:

So yes, this is one area where the law has actually become stricter, especially for big-ticket defaulters.

But for small and mid-sized cases, which make up the majority of bounced cheques in Nepal, the punishment is still quite mild. A 1-month jail term for a Rs. 15 lakh cheque? That’s hardly going to scare anyone.

That’s why critics say: sure, the punishment for the worst offenders has increased. But for everyday victims, it’s still a long, complicated road, with not much at the end of it.

3. Fine Reduced from 100% to Just 5%

Another big change: the financial penalty.

Before the amendment, the offender had to pay the full amount of the cheque plus 100% as fine. That meant double the amount, a strong deterrent.

After? they only pay the original cheque amount, the interest, and 5% of the amount as fine

Let’s say someone bounced a cheque worth Rs. 1 crore.

Under the old system, they could be liable for Rs. 2 crore.
Now? Just Rs. 1.05 crore.

For big defaulters, that’s not even a slap on the wrist.

4. From 5 Years to Just Over a Year: A Countdown You Can’t Miss

Before, if someone gave you a bad cheque, you had 5 years to take legal action. That meant you had time to follow up, negotiate, wait patiently, and still go to court if things didn’t work out.

Now? That window is gone.

The new law has introduced a much stricter and shorter timeline, and if you miss it, your case is over. Here’s how it works step-by-step:

Step 1: Give Them a Chance (Up to 45 Days)

As soon as the cheque bounces, you must inform the person who gave you the cheque and give them up to 45 days to arrange the payment.

You can send the notice any way you like (text, email, written letter) as long as you keep a record that proves you warned them.

This step is mandatory. Without it, you can’t move forward.

Step 2: Bank Confirms the Cheque Has Bounced

If the money doesn’t come within those 45 days, the bank will officially mark the cheque as “bounced” and return it to you (stamped and certified) within 3 working days.

That stamped cheque becomes your legal proof.

Step 3: You Now Have 1 Year to Go to the Police

From the date the bank confirms the cheque bounced, you have 1 year to file a complaint with the police.

If you wait longer than that? Sorry, the law won’t help you anymore.

Step 4: Then 6 More Months to File in Court

Once you file with the Nepal Police, you get another 6 months to officially register your case in court.

Again, miss that deadline?
Your case is dead in the water.

You now have just over a year total (1 year + 6 months) to go from bounce → police → court. If you don’t act quickly, you lose your legal right, even if the cheque was clearly bad.

No more waiting.
No more flexibility.
No more second chances.

The old 5-year grace period has been replaced with a tight legal countdown, and it starts the moment the cheque bounces.

Summary Table: Before vs. After Comparison

What About Those Who Were Waiting Under the 5-Year Deadline?

Many Nepalis were patiently waiting for justice, relying on what the law clearly allowed them five years to file a cheque bounce case under Section 107(a) of the Negotiable Instruments Act, 2034.

They waited out of good faith, hoping for repayment, and trusting the system

But in one sudden move, the amendment to the Banking Offence and Punishment Act 2064 changed everything.

The Civil Route Was Repealed With No Saving Clause

• Section 107(a) was completely removed
• But the amendment included no transitional provision for those already waiting to file
  
   
• Thousands who were within the 5-year limit are now legally blocked from pursuing justice

Legal Norm Violated: Laws Shouldn’t Be Retroactive

By legal tradition:

New laws should apply moving forward, not erase rights that already existed.

But with the civil path gone, and no safeguard in place, even people whose cheques bounced 1–2 years ago have no legal basis to file now.

Legal and Constitutional Questions Raised

The amendment to the Banking Offence and Punishment Act 2064 didn’t just cause confusion, it opened a floodgate of serious legal and constitutional concerns.

Let’s look at the biggest ones:

1. Right to Justice (Article 20 of the Constitution)

Nepal’s Constitution guarantees every citizen the right to a fair legal remedy.

But here’s the issue:

• Thousands were waiting to file cheque bounce cases under the 5-year rule
• The amendment came without notice, without protection, and without options

So the question is:
Can you deny justice to someone who was relying on a law that was still valid when they began waiting?

2. Right to Property (Article 25)

A bounced cheque isn’t just a piece of paper, it represents someone’s hard-earned money.

If the law prevents them from recovering it, does it violate their right to property?

Legal experts argue:
By removing their path to recover that money, the state is essentially blocking them from protecting their own property.

3. Retroactive Effect Without Saying So

The law doesn’t say it applies retroactively. But by removing the civil path without a saving clause, that’s exactly what it does in practice.

Anyone who had a bounced cheque before Baisakh 2082 but had not yet filed a case?
Their right disappeared overnight.

That’s not just bad drafting, it may be unconstitutional.

4. Rule of Law at Risk

One of the most basic legal principles is this:

“People should be able to rely on the law as it exists.”

But when a law changes without warning, without transition, and undoes people’s rights, it creates uncertainty. It tells citizens:

“Even if you follow the law, we might change it and leave you behind.”

That’s not how trust in the legal system is built.

Stakeholder Responses

This amendment didn’t go unnoticed. From lawyers to victims, reactions came fast, and loud.

1. High Court Bar Association, Biratnagar

The High Court Bar Association Biratnagar was the first to raise their voice.

They called the amendment:

 “A blatant injustice.”
“A move that shuts the door on justice for ordinary people.”
“An act that protects defaulters and penalizes the patient.”

They formally demanded the following:

• A saving clause for those within the 5-year limit
• Immediate reconsideration of the amendment

2. The Victims

People across Nepal; shopkeepers, landlords, service providers, small businesses feel completely betrayed.

They did what the law told them to do. They waited. They gave people time. Now they’re being punished for trusting the system.

There’s deep frustration  and many fear they’ve lost their money for good. While others are simply shocked they have no legal remedy left

3. Lawmakers and the Government

So far? Silence.

Despite the growing backlash, no public statement or clarification has come from the Ministry of Law, the Parliament, or the regulators involved.

And that silence is only adding to the confusion and resentment.

4. Legal Experts

Their reactions are split:

Even those who support the change agree that a transitional clause should have been included and victims relying on the old 5-year law deserve protection

Implications for Justice, Business, and Enforcement

The changes to the Banking Offence and Punishment Act 2064 don’t just affect lawyers and courtrooms, they have ripple effects across the entire economy and society.

Let’s look at what this means on the ground.

1. Fewer Court Filings, Not Less Crime

At first glance, this law may appear to streamline the process by shortening deadlines. But in reality, it’s not discouraging cheque bounce incidents, it’s discouraging victims from seeking justice.

Many people now find themselves disqualified from filing a case simply because they waited longer than a year, even though they were still within the 5-year window allowed previously. This doesn’t reduce disputes. It just reduces access to courts.

There’s also growing concern that this could trigger a rise in writ petitions, where affected individuals challenge the fairness of the amendment itself, clogging courts in a different way.

2. Business and Economy: Trust Issues Incoming

In Nepal, cheques have long been a practical tool to buy, sell, rent, and lend. But with the civil route gone and only a criminal process available, (one that’s strict, time-bound, and complicated) many business owners now hesitate.

Why risk giving a cheque if the system won’t help you recover your money when it bounces?

This is especially true for SMEs, landlords, service providers, and freelancers who lack the time and resources to navigate the criminal process. The natural fallback? Shift back to cash or informal credit systems, undoing years of progress toward transparency and traceability.

3. Legal Certainty: Is the Law Even Reliable?

The most serious implication of all is this: the amendment has shaken people’s confidence in the reliability of law itself.

Because his amendment has just sent a dangerous message:

“The law can change without warning. And you may not be protected. Even if you follow the rules, you might still lose”

Citizens followed a law that gave them five years. They trusted it. But now the rules have changed without warning, and they’ve been left with nothing.

When the law doesn’t protect those who comply, what kind of message does it send? That’s a question Nepal must reckon with.

What Can Be Done?

Despite its flaws, this amendment can still be fixed. And if the government moves quickly, it can restore trust and fairness, without undoing its goals.

1. Protect Those Already in the 5-Year Window

The most urgent step is to introduce a saving clause. Those who were still within the old 5-year limit when the amendment came into effect should not be blocked from seeking justice.

Their cases should be allowed to proceed under the law they originally relied on. That’s not just a legal safeguard, it’s a moral one.

2. Clarify the Law, Publicly and Immediately

Silence breeds confusion. The government or judiciary should issue a clear notice: what happens to cheques bounced before Baisakh 2082? Is there any grace period? What should victims do now?

Even a simple clarification could prevent hundreds of unnecessary legal complications.

3. Rethink the Fine and Penalty System

The flat 5% penalty may be too lenient, especially in large-value or fraudulent cases. A progressive system based on the amount involved would send a stronger message: if you misuse a cheque, there will be proportionate consequences.

Also, just 1 month of imprisonment for bad cheques of up to 15 lakhs seems too unfair. Just think of how long it would take for someone with a basic salary to accumulate that amount! 

4. Inform the Public Before It’s Too Late

Many victims still don’t know the law has changed. If they wait more than a year to act, their rights will expire without them even realizing it.

We need targeted awareness campaigns. Not just online, but in banks, cooperatives, legal aid centers, and local government offices, so people know how the new rules work and what timelines they must follow.

5. Revisit the Law, With Input from the Ground

Finally, this law deserves a second look. It may work for large-scale fraud cases, but it’s failing ordinary people. There’s room for a hybrid model, keeping the criminal path for serious cases while restoring a civil route for genuine commercial disputes.

Because justice should be tough on fraud, yes, but also fair to those who trusted the system.

Conclusion: A Law That Got It Wrong on Both Sides

When the government changed the Banking Offence and Punishment Act 2064, the goal sounded good on paper; make cheque bounce cases faster, stricter, and more efficient.

But here’s the thing:
A fair law should do two things:

• Stop the wrongdoers
• And protect the people who did the right thing

This amendment? It’s struggling on both fronts.

Yes, one thing did get tougher; Jail time now goes up depending on the cheque amount.
That’s new. Before, no matter how big the cheque, the maximum was just 3 months. Now it can go up to 4 years. And that’s fair in big fraud cases.

But,

The fine got slashed from 100% of the cheque amount to just 5%, even for massive sums.
So for big defaulters, the financial hit is now barely a sting.

And the biggest issue?
The law cut the time limit from 5 years to just 1 year (plus 6 months for court filing).
And it did so without warning, and without protecting anyone who was already waiting under the old rules.

That means thousands of people, who waited in good faith, followed the system, and trusted the law, are now blocked from filing a case. Their time ran out, not because they delayed, but because the rules changed mid-game.

And what message does that send?

“If you issue a bad cheque, the punishment is now lighter than before, unless it’s a massive amount.”

“And if you’re the victim? You should’ve rushed to file a case, even though the old law told you you had five years.”

That’s not just frustrating, that feels like betrayal.

Because justice isn’t just about punishing someone.
It’s about protecting the person who trusted the system.The shopkeeper, the freelancer, the small business owner, the landlord, the friend who gave a loan.

People who waited, who believed the law was on their side, and now find themselves with no legal path forward.

But we have a choice to make. We can stay silent, or we can speak up.

Because in the end, the law isn’t just about punishing the guilty.

It’s about standing with the people who did everything right.