The Central Bank of Nigeria (CBN) has introduced a draft of new regulatory guidelines aimed at reducing the issuance of dud cheques and promoting financial discipline in the banking sector. The proposed framework, released for industry review, outlines stricter penalties for banks and customers who issue dud cheques.
According to the guidelines, customers who repeatedly issue dud cheques will face a five-year ban, with the CBN defining a serial offender as anyone who issues three dishonoured cheques across the banking system. The draft also introduces fines ranging from N1 million to N5 million per incident for infractions such as failing to report a dud cheque within the stipulated timeframe or neglecting to cancel unused cheque leaves.
The guidelines require banks to report dud cheques to the Credit Risk Management System and two licensed credit bureaux within one hour of confirmation. Institutions must also notify affected customers within two working days using a verifiable communication channel and retain copies of dishonoured cheques for at least five years. Additionally, banks will be required to warn account holders about the consequences of issuing dud cheques before issuing cheque books, a measure intended to strengthen due diligence and reduce misuse at the onboarding stage.
The proposed guideline, issued under the CBN Act 2007 and the BOFIA 2020 framework, aims to replace all previous circulars on dud cheque administration. The CBN hopes to tighten compliance measures, restore trust in cheque transactions, and reduce persistent abuses that regulators say continue despite longstanding legal controls. The new guidelines are expected to promote a more disciplined and transparent banking system, ultimately benefiting both customers and financial institutions.
The introduction of these guidelines is a significant step towards addressing the issue of dud cheques in Nigeria. The CBN’s efforts to strengthen financial discipline and reduce fraud are crucial for maintaining a stable and trustworthy banking system. As the guidelines are finalized and implemented, it is expected that the incidence of dud cheques will decrease, and the overall integrity of the banking system will be enhanced. The CBN’s move is a positive development for the Nigerian economy, and its impact will be closely monitored by stakeholders in the financial sector.