NRB Amends Unified Directive on Bounced Cheques and Blacklisting Procedures

Nepal Rastra Bank (NRB) has introduced significant amendments to its Unified Directive, 2081, regarding the treatment of bounced cheques and the process of blacklisting individuals or institutions. The revised provisions apply to 'A', 'B', and 'C' class licensed banks and financial institutions (BFIs).

Key Highlights of the Amendment:

1. Cheque Bounce Due to Insufficient Balance:
   If a cheque is returned due to insufficient funds, the cheque holder must be provided with at least two working days to re-present the cheque to the concerned BFI. The institution must notify the holder in writing, clearly stating the reason for non-payment as insufficient balance.

2. Further Non-Payment After Notice:
   Should the cheque remain unpaid after the given period, the cheque issuer—be it an individual, firm, company, or organized institution—must be listed in the credit information center’s blacklist. The BFI is required to notify the issuer and provide a seven-day notice (excluding public holidays) for payment before initiating the blacklisting process.

3. Other Grounds for Cheque Rejection Leading to Blacklisting:

   • Closing the account before cheque clearance.

   • Mismatched or forged signatures on the cheque.

   • Unjustified stop-payment instructions.

   • Cheques returned under any condition where the cheque holder could not verify the correctness of the cheque details.

4. Issuers Subject to Fine:
   Directors, CEOs, and other officials of BFIs who fail to comply with NRB's directives and are penalized with fines, but have not cleared the amount, will also face blacklisting.

5. Inclusion of Foreign Individuals and Institutions:
   The amended directive clarifies that foreign citizens and institutions holding accounts in Nepali BFIs are also subject to the same blacklisting provisions for bounced cheques.

6. Temporary Relief to Construction Companies:
   Construction companies will not be blacklisted solely due to cheque bounce issues until the end of Mangsir 2081.

Delisting from the Blacklist:

BFIs must recommend removal from the blacklist within three working days to the Credit Information Center under the following conditions:

• If the borrower clears the overdue loan principal and interest.

• If the cheque amount is paid to the cheque holder or earmarked accordingly, or if a settlement is made as per prevailing legal provisions.

Once the request is received, the Credit Information Center must update the blacklist within three working days.

Objective:

These revisions aim to enhance the accountability of cheque issuers and provide clear procedural steps for BFIs to address bounced cheques, thereby maintaining financial discipline in the banking system.