India planning to Decriminalise Bounced Cheques, Sarfaesi Provisions may hurt Banks, clog courts.
Decriminalising economic offences including bounced cheques and violation of the provisions of a loan recovery law, a move that may come as a blow to lenders and trigger litigation seems to be India’s plan.
Around 39 economic offences in 19 acts are being decriminalised by the government and being reclassified as civil offences for which it has sought comments from stakeholders.
Cheques returned because of inadequate funds in a bank account is an offence under the Negotiable Instruments Act. The law provides for two-year imprisonment and a fine equivalent to twice the amount involved. It’ll be a major blow to banks and suppliers who are owed money as decriminalising this law will affect recovery, said VG Kannan, a former banker. Agreed RK Thakkar, former chairman and managing director of UCO Bank, who said decriminalising section 138 of the act will affect recovery of banks as well as that of other creditors or suppliers.