Raising concern over the proposed decriminalisation of bouncing of cheques, the Confederation of All India Traders (CAIT) has advised Finance Minister Nirmala Sitharaman against it.
In a letter to the Finance Minister, the CAIT urged the government not to decriminalise Section 138 of the Negotiable Instruments Act, 1881 under any circumstances, and said such a move would nullify the sanctity of cheques and the banking sector of India.
According to the CAIT, the proposed decriminalisation, if implemented, will distort the business conditions and give tremendous rise to unfair and unethical trade practices, thereby putting crores of businessmen under the severe risk of losing money to immoral and fraudulent elements of society.
"Not only the traders, but others will also find it difficult to purchase any goods on EMI since EMI is always supported by post-dated cheques. Henceforth, no one will accept post-dated cheques," it said.
On the one hand the government recently included Sections 143 and 148 to make the Negotiable Instruments Act more effective in providing redress to the complainants, on the other hand it was seeking to dilute the Act, the CAIT said.
Bouncing of cheques issued against an enforceable debt must be taken as a "very serious issue," it said.
Post-dated cheques were an important instrument of business and ensured sufficiency of working capital by acting as guarantee for several modes of finance and credit, it said. The Department of Financial Services last month issued a statement seeking comments from stakeholders on decriminalisation of several minor offences, which included bouncing of cheques, to improve the business sentiment.