Bouncing Of Cheques May Not Be An ‘Economic Offence’ Anymore

If the thought of ‘bouncing a cheque’ was enough to give you a jolt then it may no longer be the case. The government is looking to decriminalize the bouncing of the cheques. Along with it 39 economic offenses in 19 acts are also considered for being decriminalized.

As of now, bounced cheques can lead to up to 2 years imprisonment or a fine equivalent to twice the amount involved or both. “Bouncing of post-dated equated monthly installment (EMI) cheques can increase and non-collateralized loans become riskier“, said a bank official about the move.

For decriminalizing 39 offenses changes would require to be made in the Banking Regulation Act, the Reserve Bank of India (RBI) Act, the Insurance Act. The offense of dishonor of cheque under section 138 of the negotiable instruments act is one of those changes that the Finance Minister proposed. The government’s idea behind the move is to speed up the economic revival process and encourage businesses.

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Bankers, however, have pointed following concerns in regards to the decriminalizing of bouncing of the cheques:

  • It would impact the quality of the credit at a time when banks are already staring at about Rs 5 lakh crore in fresh slippage.
  • With decriminalization, the pressure on the drawer or cheque writer to honor dated and post-dated cheque gets diluted.
  • Less acceptance of Cheque and more prevalence of payment in cash would become the norm.

The changes however are not going to be implemented straight away. The Department of Financial Services has sought comments from stakeholders before making the changes.

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