The Central Bank of Nigeria (CBN) has introduced stricter measures to curb the issuance of dud cheques, including an automatic five-year ban for repeat offenders. The proposal is part of a new draft guideline aimed at reinforcing financial discipline and restoring confidence in the use of cheques.
Titled *Guidelines on the Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria*, the exposure draft was released on Monday for stakeholder feedback. It seeks to replace all previous circulars on the matter and aligns with the CBN Act (2007) and the Banks and Other Financial Institutions Act (2020).
One-Hour Reporting Requirement
Financial institutions must report any dishonoured cheque due to insufficient funds to the Credit Risk Management System (CRMS) and at least two private credit bureaus within one hour of confirmation. Customers must also be notified within two working days through verifiable channels, with full details of the dishonoured instrument.
Serial Offender Classification
A customer will be classified as a “serial dud cheque issuer” after three instances of issuing dud cheques across the banking system. Once flagged, the CRMS will immediately notify all financial institutions, triggering significant restrictions.
Automatic Five-Year Ban
Serial offenders will face an automatic five-year ban from:
– Accessing the clearing system
– Opening current accounts
– Obtaining credit from any bank or financial institution
Repeat Offences
Individuals who reoffend after serving an initial ban will face an additional five-year prohibition for each subsequent violation, with no upper limit on the ban duration.
Penalties for Non-Compliant Institutions**
Banks and financial institutions failing to adhere to the guidelines—such as neglecting to report incidents, notify customers, or conduct mandatory checks—will face fines ranging from ₦1 million to ₦5 million per infraction. Credit bureaus may also be penalized up to ₦2 million for incomplete record-keeping.
The CBN emphasized that the measure aims to deter financial misconduct, protect the integrity of the payment system, and promote broader compliance across the industry. The draft guideline is open for public comments for three weeks and can be accessed on the CBN website. Submissions should be directed to the Director of the Financial Policy and Regulation Department.
This initiative underscores the CBN’s commitment to strengthening Nigeria’s financial ecosystem and ensuring its resilience against fraudulent practices.
