NRB issues strict orders on good-for-payment bank cheques

KATHMANDU, DEC 22 -

Nepal Rastra Bank ( NRB ) issued strict directives on the issuance of good for payment cheques on Friday even as the banking industry continues to reel from a rash of cheque scams. While a branch manager at H&B Development Bank is under investigation for issuing good for payment cheques without sufficient balance, Everest Bank and General Finance have also suffered similar cheque fraud.

As per the latest NRB directive, the signatures of two officials and the stamp of the bank or financial institution (BFI) are required to issue good for payment cheques. The signers will also have to state their code number, name, post and date. A good for payment cheque is guaranteed by the bank on which it is drawn. In the case of H&B, it was revealed that only the branch manager of the Kuleshwor branch Niraj Nepal, who is the chief alleged fraudster, would sign good for payment cheques. “It is a widely practiced tradition for two officials to sign good for payment cheques. But without specific directions from the central bank, some BFIs have not been observing the practice,” said NRB spokesperson Bhaskarmani Gnawali.

Meanwhile, the NRB has also specifically prohibited good for payment cheques from being used as collateral to obtain loans. Although the central bank had banned issuing credit against any type of cheque, a number of financial institutions and cooperatives were found to have provided loans to fraudsters against such cheques, as in the case of H&B, said central bank officials.

In order to make such cheques authentic, NRB has directed BFIs that they should prevent withdrawal of deposits equivalent to the amount shown on the cheque with a system generated ear-mark. They should also give the receiver of the cheque a system printed evidence. In the case of H&B, despite issuing good for payment cheques, the bank failed to stop the withdrawal of equivalent amount resulting in the issuance of cheques against any deposit amount, according to central bank officials.

Meanwhile, NRB has also barred issuing post-dated good for payment cheques. “The date mentioned on the cheque should be the day when the cheque is issued,” said Gnawali.

Source: The Kathmandu Post