The Central Bank of Nigeria (CBN) is set to introduce a policy that would impose a five-year ban on individuals deemed “serial dud cheque issuers.”
Under the proposed rules, a customer becomes a serial dud cheque issuer if they issue three cheques that are returned due to insufficient funds. The CBN outlined the measure in an exposure draft of its ‘Guidelines on the Treatment of Dud Cheques’, which would allow banks and other financial institutions to blacklist such offenders.
Offenders would face multiple restrictions, including being barred from the cheque clearing system, denied access to credit from any bank, and prevented from opening current accounts during the five-year sanction period. Banks are also required to apply returned-cheque charges as specified in the national Guide to Charges.
All commercial, merchant, non-interest, mortgage, and microfinance banks must enforce the sanctions, collect unused cheque leaves, and report offenders to the Credit Risk Management System (CRMS) and at least two private credit bureaux.
The guidelines also provide for harsher penalties for repeat offenders. Any customer who issues another dud cheque after completing a previous five-year ban would face an additional five-year restriction for each subsequent offence.
Sanctions can only be lifted upon expiration of the ban or if a financial institution verifies an erroneous report. Banks must update the customer’s status with the credit bureaux and issue formal notification when the sanction ends.
The CBN warned that non-compliant banks would face substantial fines: a minimum of N5 million for failing to enforce restrictions and N3 million for opening a current account without checking the customer’s CRMS status.
