CBN To Ban Dud Cheque Issuers From Banking System

The Central Bank of Nigeria, CBN has proposed a five-year ban for serial dud cheque issuers, saying violators will be barred from accessing credit and opening accounts in commercial banks and other financial institutions, OFIs in the country.

According to the Yemi Cardoso-led CBN, a customer is designated ‘serial dud cheque issuer’ when he/ she issues cheques three times and they are not honoured due to insufficient funds in his/her accounts.

The apex bank announced this yesterday in a circular addressed to banks and OFIs titled ‘Guidelines on the Treatment of Dud Cheques’,  and signed by CBN Director, Financial Policy and Regulation Department, Central Dr. Rita Sike, a move it said was necessary to check fraudulent practices and  fraud in the nation’s financial system.

The government reserve bank said the guidelines is in line with its powers under the CBN Act, 2007 (CBN Act), the Banks and Other Financial Institutions Act (BOFIA), 2020, and other laws applicable.

“In exercise of the powers vested on the Central Bank of Nigeria (CBN) under the  Central Bank of Nigeria Act, 2007 (CBN Act), the Banks and Other Financial Institutions Act (BOFIA), 2020, and other applicable laws, the CBN hereby issues for stakeholder comments and feedback the attached draft Guidelines on Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria,” the bank said.

According to the CBN, the guideline is aimed at deterring customers from issuing dud cheques by establishing procedures for the treatment of dud cheques with defined sanctions and penalties; Promote integrity and confidence in the use of cheques as a reliable means of payment; Streamline the process for identifying dud cheque issuers, reporting them to CBN and Private Credit Bureaux, and blacklisting serial dud cheque issuers; and Identify the stakeholders and specify their roles and responsibilities in managing and resolving dud cheque issues.

Also, the CBN said the guideline will Strengthen dispute resolution mechanisms for issues involving dud cheques between customers and financial institutions; as well as promote compliance and accountability in reporting and managing dud cheques issues

Roles of Banks In Enforcing The Guidelines

The CBN stressed that banks must ensure that the customer qualifies as dud cheque issuer before reporting as defined in clause; render returns on the CBN Credit Risk Management System (CRMS), (or any other platform as may be determined by the CBN from time to time), and at least two (2) PCBs; pass the necessary debit and credit entries in the customers’ account in respect of dud cheques presented over the counter, in a similar manner as is done for dud cheques presented through the clearing system; keep a copy of the dud cheque for a minimum period of 5 years, while the original cheque shall be returned to the payee; and perform status checks on the dud cheque database before opening a current account for a customer.