Sri Lanka’s payment landscape has taken a decisive step into the digital era. The Bills of Exchange (Amendment) Act, No. 13 of 2025 modernises the country’s negotiable instruments law, aligning a century-old framework with today’s realities of electronic banking, instant transactions, and globalised commerce.
For technical and financial decision-makers, this reform is not merely a legal update — it represents a structural shift in how payment obligations, accountability, and enforcement will operate in a digital economy.
1. Why this amendment matters
The original Bills of Exchange Ordinance (Chapter 82), dating back to 1927, governed cheques and other negotiable instruments in a largely paper-based world. Over the years, commercial practice evolved, but the statute lagged behind. Manual presentment, physical endorsements, and strict proof requirements led to inefficiency and exposure to fraud.
The 2025 Amendment closes that gap. It introduces digital recognition of cheques, clearer definitions, streamlined proof standards, and a calibrated criminal enforcement regime to strengthen payment discipline.
For businesses, the message is clear: your cheque processes, internal controls, and contract documentation must now align with digital compliance expectations.
2. Key reforms at a glance
a. Digitalisation and recognition of electronic processes
The Act now legally recognises “electronic means” — encompassing digital, magnetic, and optical transmissions. Notices of dishonour, payment instructions, or cheque-related communications can be lawfully sent through email or secure digital platforms.
Banks are also authorised under Section 74 to present cheques electronically by transmitting scanned images and data. This move brings Sri Lanka in line with the electronic clearing practices already standard across Asia.
For corporates, this means faster settlement cycles, reduced paper handling, and fewer logistical bottlenecks. However, accuracy in imaging and data entry becomes critical — an inaccurate image or mismatched data now renders the presentment a nullity. Finance teams must implement robust verification steps before submission.
b. Updated definition of “banker”
The amendment modernises the scope of who can handle cheques. The term “banker” now covers all licensed commercial and specialised banks, as well as foreign bank branches operating in Sri Lanka.
This eliminates prior ambiguities around cross-border transactions and enables multinational banks to process and clear cheques seamlessly within the local regulatory framework.
c. Stronger accountability through criminalisation of dishonour
Under Section 82A, issuing a cheque that bounces — whether due to insufficient funds, a closed account, or wrongful countermanding — now constitutes a criminal offence.
Penalties include a fine equal to the cheque amount, imprisonment for up to two years, or both.
This is a significant behavioural reform. Much like India’s Section 138 framework, the law seeks to restore credibility to cheque-based payments by introducing real consequences for default. Businesses should ensure that their cheque issuance processes are integrated with real-time fund verification and approval controls.
d. Defined timelines and procedural clarity
The new Sections 82B to 82D bring welcome procedural certainty:
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The payee must issue a written demand within 90 days of being notified of a dishonour.
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If the drawer fails to pay within 90 days of that demand, the payee has 30 days to institute proceedings.
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A bank return notice or deposit slip is now deemed conclusive proof of dishonour — no physical cheque required in court.
These provisions cut through much of the procedural friction that previously plagued cheque litigation, expediting recourse for businesses and financial institutions.
e. Corporate liability and governance implications
Perhaps one of the most consequential developments is Section 82F, which extends liability for offences committed by a company to its directors, managers, and partners — unless they can prove lack of knowledge or due diligence.
This provision reinforces the trend toward personal accountability in corporate financial governance.
Boards and finance heads must treat cheque issuance as a compliance function, not a routine operational task. Proper delegation, system authorisation, and audit trails are now essential safeguards.
f. Alignment with prevailing legal interest rates
Section 9 replaces the outdated fixed 9% interest rate on dishonoured instruments with the prevailing legal rate, ensuring that compensation remains fair and market-aligned.
3. Business impact and compliance implications
Collectively, these reforms strengthen confidence in cheque-based transactions and align Sri Lanka’s financial system with global digital banking standards.
For businesses, the practical implications are clear:
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Adopt digital processing: Upgrade internal payment and banking systems to enable electronic cheque presentment and storage.
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Strengthen verification: Implement accuracy checks and dual-authorisation for image submissions.
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Train staff: Finance and legal teams must understand the new offence provisions and procedural deadlines.
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Review contracts: Payment terms in commercial agreements should reflect electronic presentment and updated legal timelines.
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Engage with banks: Coordinate system readiness and compliance reporting with banking partners.
4. Practical challenges to look out for
While the amendments are transformative, some practical challenges remain:
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How courts will interpret “inaccuracy” in a digital image — will minor technical errors invalidate an otherwise genuine transaction?
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Whether electronic clearing will raise new data-protection or evidentiary issues.
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How the balance between strict criminal liability and commercial fairness will evolve once enforcement begins.
These uncertainties make it crucial for corporates to maintain strong documentation and compliance records to demonstrate good faith and due diligence.
5. The JAAR Law perspective
At JAAR Law, we view this reform as more than a procedural update — it is part of Sri Lanka’s broader movement toward digital governance and commercial accountability.
Our focus remains on helping clients translate legislative reform into practical compliance:
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Mapping payment flows to identify regulatory touchpoints,
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Updating internal finance SOPs and contractual templates, and
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Training finance and legal teams on the new statutory timelines and enforcement risks.
Businesses that adapt early will not only avoid regulatory exposure but also benefit from faster payment cycles and enhanced transparency in their financial operations.
In conclusion, the Bills of Exchange (Amendment) Act 2025 brings Sri Lanka’s negotiable instruments regime in line with global digital standards while embedding accountability into everyday transactions.
The transition from paper to pixels isn’t just about efficiency — it’s about trust, governance, and the legal reliability of commerce in a connected world.