Negotiable Instrument Act : NRB set to revisit Act to curb frauds

KATHMANDU, FEB 13 -

Nepal Rastra Bank ( NRB ) has started homework to revise the Negotiable Instrument Act 1977 to address frauds perpetrated by using cheque, draft and other negotiable instruments.

Realising that the provision in the current Act insufficient in the changed context, the central bank has started soliciting views from the stakeholders about the areas that need to be revised. “The move is guided by making it contextual and cutting off the outdated provision,” said a central bank official involved in the revision of the Act.

The current version of the Act only talks about banks but not the financial institutions. “Likewise, there is also a need to address the electronic use of cheques and drafts, as the current Act does not speak about electronic use of such materials,” said the NRB official.

Currently, clearing and settlement bank cheques are taking place electronically. A separate company has been formed with participation of the central bank and other banks and financial institutions to carry out clearance and settlement of the cheques electronically.

While the NRB Act 2002 limits the authority of clearing and settlement of cheques to the central bank, the NRB latter bestowed its rights to the new company through a directive. “The revision in Negotiable Instrument Act will also address the electronic clearance and settlement activities,” said the central bank official.

This Act, he said, will also incorporate transactions of cheques of cooperatives. “There will be a provision for addressing the cheque frauds and necessary legal action against perpetrators of such acts,” he said.

Currently, the Act has the provision of just recovering the account involved in fraud. “We plan to make a provision of higher punishment in such frauds during the revision,” the NRB official added.

Source: The Kathmandu Post