Rwanda
Regulation of the National Bank of Rwanda relating to Bouncing Cheques
Regulation 2310-18 of 2018
- Published in Official Gazette special on 16 January 2019
- Assented to on 27 December 2018
- Commenced on 16 January 2019
- [This is the version of this document from 16 January 2019.]
Chapter One
General provisions
Article One – Purpose
This Regulation aims at preventing issues relating to issuance of bouncing cheques and provide for penalties applicable to cheque defaulters.Article 2 – Scope
This Regulation shall apply to bouncing cheques, the paying bank, the presenting bank, and the cheque defaulter.Article 3 – Definitions
In this Regulation, the following shall mean:1°Cheque: an unconditional order in writing that is addressed by its signatory to one bank or one financial institution and requires to pay on demand a sum certain in money to the drawer or to a specified person or to the bearer. The name of the bank or financial institution on which the check is drawn shall be clearly indicated;2°Physical cheque: paper based document filled from the cheque book;3°Truncated cheque: cheque truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing;4°Bouncing cheque: physical or truncated cheque that is not paid due to lack of funds or sufficient funds on the drawer"s account within the validity period;5°First incident: first presentation of a bouncing cheque or several bouncing cheques issued by a drawer to a bank or several banks at a same date, irrespective of the time when these bouncing cheques were presented for payment;6°Subsequent incident: any presentation for payment of a bouncing cheque issued by a drawer after the first incident;7°Paying Bank: a bank or a Micro finance institution at or through which a cheque is payable and to which the cheque is sent for payment;8°Presenting Bank: bank or a Micro finance institution that receives the cheque from the customer, either directly or via a third party, or presents the cheque to the clearing house for clearing and settlement;9°Cheque defaulter: a drawer whose cheque has bounced.Chapter 2
Obligations of the paying bank and the drawer
Article 4 – Obligations of the paying bank
The paying bank has the following obligations:1°Formally and clearly inform the customer on the use of the cheque before providing cheque books;2°Formally inform the customer of the consequences of issuing bouncing cheques including related sanctions;3°Formally notify the drawer on its bouncing cheque with detailed information in accordance with standard letter attached in appendix with copy to the National Bank of Rwanda for information;4°Report all bouncing cheques to the National Bank of Rwanda and Credit Reference Bureau, in accordance with reporting requirements. For reporting purpose, the amount on bouncing cheque(s) denominated in foreign currency shall be converted in Rwandan francs using the exchange rate applicable on the presentation date;5 °Rej ect the expired cheque with mention “expired cheque” even where there are no sufficient funds on the drawer’s account.Article 5 – Obligations of the drawer
The drawer has the following obligations:1 °Hold sufficient funds on the account on the due date until the expiration of validity of the issued cheque; and2°Officially inform the paying bank of the incident of loss or theft of the cheque or cheque book.Chapter 3
Bouncing cheque
Article 6 – Characteristics of bouncing cheque
A cheque shall be considered as bouncing when:1°it is not paid due to lack of funds or lack of sufficient funds on the drawee's account within validity period; and2°it is drawn on a closed account.Chapter 4
Sanctions and removal of sanctions
Article 7 – Sanctions applicable to a cheque defaulter
Without prejudice to the criminal provisions applicable to the offence of issuing bouncing cheque, a cheque defaulter shall not be allowed to:1°Access any credit facility in banks, microfinance institution or in any lending institution;2°Be provided a new cheque book by any bank or micro finance institution;3°Open a new account in a bank or in a microfinance institution.In addition to sanctions stipulated in paragraph one of this article, a cheque defaulter shall return back all cheque books given to him by his banks or micro finance institutions.Sanctions stipulated in paragraph one of this article shall apply for a period of six (6) months for the first incident and one year for subsequent incidents.Article 8 – Conditions for removal of sanctions
The sanctions stipulated in Article 7 of this Regulation shall be removed subject to the following:1°Proof of payment of all bouncing cheques drawn by the cheque defaulter and certified by the paying bank. This proof should indicate the date of settlement ofthe cheque;2°Clearance letter from the National Public Prosecution Authority;3°Payment of pecuniary sanction equivalent to 20% of the amount mentioned on each bouncing cheque; and4°Completion of the sanction period specified in article 7 of this Regulation.The Management of the paying bank shall on behalf of the cheque defaulter, apply to the National Bank of Rwanda for the removal of sanctions. The application file shall contain documents proving beyond any reasonable doubt that the requirements stipulated in paragraph one of this Article have been met.The pecuniary sanction whose amount is specified in the paragraph one of this article shall be paid by the cheque defaulter and shall be equally shared between the paying bank and the National Bank of Rwanda. The paying bank shall transfer the portion of the National Bank of Rwanda and submit the proof together with the application file for removal of sanctions.Article 9 – Reply to the application for removal of sanctions
Upon reception of a complete file as specified in article 8 of this regulation, the National Bank of Rwanda shall analyze the application and reply by a written letter to the applicant bank with a copy to all banks, other relevant financial institutions and the Credit Reference Bureau within a period of seven (7) working days.Article 10 – Cheque reported as bouncing while untrue
A bank which reports a cheque as bouncing while untrue shall be charged a pecuniary sanction of three hundred thousand Rwandan Francs (FRW 300,000) by the National Bank of Rwanda for each cheque so reported.Chapter 5
Final provisions
Article 11 – Repealing provision
The regulation N° 006/2015 of 16/09/2015 of the National Bank of Rwanda relating to bouncing cheques and all prior regulatory provisions inconsistent with this Regulation are hereby repealed.Article 12 – Sanctions taken under repealed regulation and instructions
Cheque defaulters sanctioned under the repealed instruction shall comply with sanctions provided in this regulation.Article 13 – Commencement
This Regulation shall come into force on the date of its publication in the Official Gazette of the Republic of Rwanda.History of this document
16 January 2019 this version
Commenced
27 December 2018
Assented to
Cited documents 2
Legislation 2
| 1. | Law governing the National Bank of Rwanda | 4 citations |
| 2. | Law governing the Organisation of Banking | 2 citations |