New law targets ‘Bounced Cheques’ with harsher penalties

August 22, 2025 at 11:15 AM

A new legal reform aimed at curbing financial misconduct in Sri Lanka’s business sector has officially come into effect, introducing harsher penalties for issuing cheques without sufficient funds.

Effective from August 15, 2025, the Bills of Exchange (Amendment) Act No. 13 of 2025 empowers courts to impose fines equivalent to the cheque amount, up to two years of imprisonment, or both, for a range of cheque-related violations.

Under the new provisions, the following actions are now punishable:

  • Issuing cheques without adequate funds in the account
  • Exceeding overdraft limits when issuing cheques
  • Writing cheques from closed accounts
  • Stopping payment on cheques without a legally valid reason

In a statement on social media on the new law, opposition lawmaker Ajith P. Perera said previously, only cheques issued from closed accounts were subject to criminal penalties. 

He pointed out that the expert committee appointed to draft this law has stated that it serves as a strong safeguard to protect the business sector, foster financial discipline within the commercial community, and prevent the early collapse of enterprises.

Gazette; https://documents.gov.lk/view/acts/2025/8/13-2025_E.pdf (Newswire)