Cheque Bounce in Nepal: Precautions, Remedies, and Legal Resources

Cheque Bounce in Nepal: Precautions, Remedies, and Legal Resources

Cheque bounce has started to become worryingly common in the past few years in Nepal. If you are a businessman, or if you deal large sums in general, bounced cheques can create huge problems for you, and your revenue. Hence it is necessary that all of us remain well-informed and educated about the relevant processes and remedies for cheque bounce in Nepal.

Below, you will find common reasons why cheques aren’t accepted, how you can avoid being a victim, and if necessary, how you can remedy a cheque bounce in Nepal. We will talk about relevant legal processes, and punishments too.

What is Cheque Bounce?

A cheque is said to be bounced when the funds denoted in the cheque is not available in the account of the cheque’s benefactor. These types of cheques are known as “rubber cheques”. A bank that receives a rubber cheque will refuse to give you the amount associated with the cheque, hence steering it useless. A refusal to honor a cheque means you will not be getting the money you were promised by whoever it is that does not have sufficient funds. Hence you should be careful while receiving cheques from unverified or untrustworthy sources.

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Reasons For Cheque Bounce

While rubber cheques are mostly associated with fraud, that is not the only reason a cheque may bounce. There are several other ways that may result in a rubber cheque too, all of them are listed below.


Let’s get this out of the way first. A con artist or a fraud may try to give you a cheque worth more than what they have in their bank account. While this is possible, it is not very probable simply because of how easy it is to get caught. Besides, very few people would be willing to risk lawsuits over a bounced cheque and possible jail term.


Most cheque bounces are not intentional, they are accidental. Someone may think they have the balance that they are writing down, but may not have it in reality. Especially for cheques that are cashed in after a long time, these accidentals bounces are more likely to happen. There are several instances this may occur, some scenarios are given below:

  1. You may write a cheque for 1 lakh today thinking you have 1 lakh 50 thousand in your account unaware of the fact that a bill payment yesterday had taken up 75 thousand.
  2. You may write a cheque for 1 lakh today thinking you have 1 lakh 50 thousand in your account. After maybe a week, you forget about the transaction and use your funds to buy something else worth 60k. When your cheque is cashed in 2 weeks later, you will hence have insufficient funds.

Suspicion or stop-payments

Cheques will also bounce if the benefactor issued a stop-payment for the cheque i.e. informed the bank that they don’t want the cheque to be processed. In this case, a reason will be given to you even though the money won’t.

One last reason for cheque bounce in Nepal could be because the bank finds suspicious in the cheque such as the signature or other damaged aspect of the cheque.

How to avoid cheque bounce?

Prevention is always better than cure, so taking precautionary measures beforehand can save you a lot of trouble later on. These simple steps will help you stay more vigilant and avoid the hassles of seeking remedies for cheque bounce in Nepal later on:

  1. Accept cheques only from trustworthy sources, if something feels wrong, ask for a bank transfer or cash.
  2. Some banks let you verify if the amount mentioned in the cheque is available in the account. While this is uncommon, it can happen, and trying does not hurt.
  3. You can ask your benefactor to show you the funds available in their account if you detect suspicious behavior if they agree to it.

Social Remedies for cheque bounce in Nepal

Even with an abundance of precautions, due to the prevalence of cheque bounce in Nepal, you may still have a rubber cheque at some point. If you are the victim of cheque bounce in Nepal, there are ways to work around it so that you can get your promised sum. Remedies are of two types: social and legal, we will explore both below.

cheque bounce

If there is a cheque bounce in Nepal, most Nepali banks will charge a certain sum to the account holder, and notify them of the bounce. You can reach out to the person who gave you the cheque and ask for the promised sum in cash or by another method. You should strive for this before reporting it mainly because most cheque bounces are not intentional. Why go through the hassle of lawsuits when a simple phone call will do the trick? If the person is unreachable or outright refuses to hand out the money, then you can move on to legal remedies.

Legal Remedies for cheque bounce in Nepal

There are two laws in particular that are relevant to cheque bounce in Nepal. You can file a lawsuit pursuant to the Negotiable Instrument Act, 1977 and/ or the Banking offense and Punishment Act, 2008.

The Negotiable Instrument Act, 1977

This law provides for a civil lawsuit and will result in compensation for the promised sum, along with an applied interest. On top of that, the person who issued the cheque may also be fined up to 3 thousand or imprisoned for 3 months.

You will need to file a statement of claim in the District Court within 5 years of the event to be eligible for litigation under this act. Final hearing and decision is also done by the District court, but you can appeal to the high court later on if you are unsatisfied with the decision.

Banking Offense and Punishment Act

This act provides for a criminal lawsuit in relation to cheque bounce in Nepal. If the person that drew the cheque had knowledge that funds were not available, then pursuant to this act, they can be criminally prosecuted for recovery of the claim amount, fine, and imprisonment up to 3 months.

Since this is a criminal lawsuit, you will need to register an FIR at a Police Office within 1 year from the date when the event happened. The police department will take over from there and the hearing will be done at the High Court, with an option to appeal after the verdict at the Supreme Court.

Final Thoughts

As you can see, while it is a lot of hassle, cheque bounce in Nepal is a problem with many solutions. That should not stop you from taking necessary precautions to avoid trouble, but more often than not you will get back your promised sum. Just remember to be vigilant and take the necessary steps at the right time.

Also read: Foreign Currency Exchange in Nepal

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