"What is a "Bad Cheque?"

A "Bad Cheque" is a cheque issued by an accountholder, which is not honored by Bank where the cheque is drawn on.

This can be due to a number of reasons. The most common of them being:

• Balance in the account is not sufficient (Insufficient Funds),
• Signature of the accountholder on the cheque does not match with Bank records,
• Stale cheque (presented after 6 months of issuance) or post dated cheque (future date)
• Amount in words do not tally with the amount in figure

"Is writing a Bad Cheque punishable by law?"

Yes, if a cheque is returned due to "Insufficient Funds" it is punishable under the prevailing law of Nepal (Negotiable Instrument Act 2034 - clause 107 Ka). Nepal Rastra Bank has issued a separate directive that requires all financial institutions to take specific actions in case of accountholders who issue Bad Cheques.

"Why is Laxmi Bank driving the Stop Bad Cheques initiatives?"

Apart from legal issues, writing a Bad Cheque not only results in loss of trust between the concerned parties but more importantly, it affects the credibility of cheques as a mode of payment and pushes us back to being a "cash-based" economy.

"What is Laxmi Bank doing to curb/stop the practice of writing Bad Cheques?"

A Bad Cheque not only causes great inconvenience to the payee but is also an offence. Laxmi Bank is proud to take this first small step towards curbing / stopping intentional writing of Bad Cheques and will introduce the following measures:

• If a cheque drawn on us cannot be honored for any reason we will return the cheque with a standard "Cheque Return Memo"
• Where applicable we will also levy a penalty to the accountholder for writing Bad Cheques
• We will maintain a record of Cheque Returns due to "Insufficient Funds" and communicate to concerned accountholders requesting them to correct their account behavior
• Lastly, we will retain the right to suspend or initiate process to close an account if an accountholder chooses to ignore our requests and continues to issue Bad Cheques with Insufficient Funds repeatedly

"How can you avoid issuing Bad Cheques?"

The following precautionary measures can be adopted to avoid a Bad Cheque incident:

• "Ensure there are sufficient funds in your account before issuing any cheques
• Subscribe to services like SMS Alerts, Internet Banking or Email Solutions to keep up to date with your account status
• If you need to transfer money from another account to account on which the cheque is drawn, always check with your Bank that your instruction has been executed
• Check with your Bank to ensure that the cheque you deposited for clearing or collection (i.e. a cheque drawn on another bank) has been cleared and balance is available for you to use (note that clearing time for cheques drawn on different locations differ)
• Notify the Bank if your address and contact numbers change - this ensures that you can be contacted by the Bank for any important matters without unnecessary delays

"What are your rights as a Customer?

• To inquire from the Bank the available balance in your account which will ensure that your cheques are not dishonored
• To be notified when cheques you issue are repeatedly dishonored; the Bank will correspond with you through the best available means of communication, so it is important to keep your contact details updated at the Bank
• To be notified in writing if the Bank initiates process to close your account as a result of excessive issuance of Bad Cheques

We are introducing this policy in line with our Responsible Banking initiatives which include adopting a set of practices that encourage prudent financial behavior of our customers and all stakeholders.

As always we look forward to the continued patronage and support of our valued customers in our joint effort at "raising the bar" of our financial system.