The Ministry of Finance is likely to announce a standard operating procedure (SoP) to deal with cheque bouncing cases, reported CNBC Aawaz. Along with recovering money from other accounts, the government is preparing to take strict action in these cases like prohibition of opening of new accounts of offenders. The credit score of the company or the individual will also deteriorate. Additionally, loan default rules will be prepared for these cases, the report said.

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A meeting was held last week on the same where preparation of SoP was discussed. The provision of 2 years jail will be removed in cases of check dishonor.

Give that, Negotiable Instrument Act will likely be amended, sources were quoted as saying in the report.

The Negotiable Instruments Act, 1881 (N.I. Act) continues to be the predominant legal base for all cheque-based (instrument-based) payment systems in India. It has been amended time and again to accommodate new requirements and policies, according to Reserve Bank of India (RBI).

This comes in the wake of rising cheque bounce cases which are clogging the legal system. New measures would help promote ease of doing business and dissuade people from wilfully indulging in issuance of cheques even though their accounts have insufficient funds.

When an issuer presents a cheque to the bank for payment, and it is returned unpaid by the bank due to insufficient funds, the cheque is said to have bounced.

Earlier, Supreme Court constituted a committee with a mandate to suggest steps to be taken for early disposal of about 35 lakh pending cases across the country. During the hearing, the Centre had "in principle accepted" the need for creating additional courts to deal with such cases. The SC-constituted committee had recommended procedural reforms, full use of technology and augmentation of infrastructure to ensure that disputes are resolved swiftly.

Besides, the panel had also suggested some changes in the Negotiable Instruments Act, 1881, according to news agency Press Trust of India (PTI).

Currently, a complaint for dishonour of cheque under Section 138 of the Act can be filed in the court situated at a place where the bank of the payee is located. It is a punishable offence with a fine which can extend to twice the amount of the cheque or imprisonment for a term not more than two years or both.

(Edited by : Anshul)