Cancelling cheques may lead to CIB blacklisting

KATHMANDU:

Ordering stop payment after voluntarily issuing cheques to the bearer will make the account holder liable of getting blacklisted.

Any individual or firm that asks a bank or financial institution to cancel a cheque or payment after writing a cheque will have to justify their stop payment request or else the issuer can be blacklisted, according to a new decree of Nepal Rastra Bank (NRB).

A circular issued by the banking regulator has directed financial institutions — commercial banks, development banks and finance companies — to recommend the names of account holders who maliciously cancel payments of cheques to the Credit Information Bureau (CIB) for blacklisting.

However, NRB has asked the financial institutions to validate the stop payment only in cases of thefts, loss and unauthorised drawings.

“We have been hearing complaints of a large number of acts in which the cheque issuer asks the banks for stop payment, only to avoid paying someone money, which is why NRB decided to consider this malevolent act as bouncing back of cheques,” pointed out an official at NRB’s regulation department.

“There might be a genuine reason for account holder to cancel the cheque. However, the issuer has to provide believable testimonies and consent of the bearer as well,” added the official.

At present, not only large scale loan defaulters but any account holder who issues a cheque without having sufficient amount in the bank account to honour the cheque can also be blacklisted. If the cheque bearer issues a complaint to the financial institution that houses the bank account, the account holder will be recommended for blacklisting by CIB in case of non-payment within a deadline.

Being blacklisted makes the borrower — any person or firm — ineligible to acquire or reschedule a new loan from financial institutions, not even for a credit card. Moreover, such blacklisted persons also become ineligible to be appointed as director of any public listed company or even contest in local or general elections.

Pre-paid remittance cards in offing

Nepal Rastra Bank (NRB) has allowed remitters to issue a pre-paid remittance card in coordination with financial institutions. The central bank’s Foreign Exchange Management Department has allowed remittance companies to issue pre-paid remittance cards to their clients. Such companies need to get the backing of a commercial bank and work as a representative of the bank. The card will facilitate inward remittance from foreign countries as the remittance company can issue a card to beneficiaries of their clients abroad, who send money directly to the card through the remittance company. The concept, introduced during the monetary policy announcement of fiscal year 2013-14, aims at making remittance hassle-free and cost effective while improving banking habits of the population that receives remittance. However, only those remitters with a paid up capital of Rs 100 million will be allowed to issue such cards.

Source: THT