The Central Bank of Nigeria (CBN) has approved five-year outright bank for serial dud cheque issuer from accessing the clearing system, credit access and opening new accounts in the financial system.
The directive, issued yesterday in a circular to all banks and other financial institutions, CBN Director, Financial Policy and Regulation Department, Dr. Rita Sike, said the apex bank exercised its powers under the Central Bank of Nigeria Act, 2007 (CBN Act), the Banks and Other Financial Institutions Act (BOFIA), 2020, and other applicable laws.
The draft guildeline described dude cheque as a cheque that is dishonoured only on grounds of insufficient funds in the drawers’ account while serial dude cheque issuer is a customer that has issued a dud cheque three times in the banking system.
Among other provisions, the draft guidelines seeks to enhance clarity and offer further guidance to banks and other financial institutions on the handling of dud cheques, regulatory requirements for reporting and barring their issuers, the processes for updating and unbarring issuers of dud cheques, and the associated penalties for non-compliance.
The circular stated that first offender for returned cheque charge, will pay fee in line with the provisions of the Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions.
The advised bank customers to ensure that cheques are issued on accounts that are adequately funded, as issuance of cheques on accounts with insufficient funds constitutes breach of the guidelines.
For Commercial, Merchant, and Non-Interest Banks that issued dud cheque attracts a minimum penalty of N2,000,000 per infraction while Primary Mortgage /Microfinance Banks defaulters will pay a minimum penalty per infraction: a. N1,000,000 – PMBs (State and National) and National MFBs, N500,000 – State MFBs, N250,000 – Tier 1 Unit MFBs and N100,000 – Tier 2 Unit MFBs.
The CBN directed that the bank ensures the customer qualifies as a dud cheque issuer before reporting to CBN while failure to carry out necessary checks to ensure that the customer qualifies as a dud cheque issuer also constitutes an offence.
The CBN said that the guidelines were to deter customers from issuing dud cheques by establishing procedures for the treatment of dud cheques with defined sanctions and penalties.
It was also meant to 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.
The guidelines will also help to strengthen dispute resolution mechanisms for issues involving dud cheques between customers and financial institutions and promote compliance and accountability in reporting and managing dud cheques issues.
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