The Central Bank of Nigeria (CBN) is developing a new policy that will impose a five-year ban on individuals identified as serial dud cheque issuers. According to the exposure draft of the proposed “Guidelines on the Treatment of Dud Cheques,” a customer will be designated as a serial offender after issuing dud cheques on three occasions due to insufficient funds in their account.
The draft policy empowers banks and other financial institutions to blacklist such individuals, who will then be denied access to the cheque clearing system, barred from obtaining credit facilities from any financial institution, and restricted from opening current accounts throughout the five-year sanction period. Banks will also be required to apply returned-cheque charges as stated in the national Guide to Charges.
The CBN has directed all commercial, merchant, non-interest, mortgage, and microfinance banks to strictly enforce the sanctions. They must retrieve unused cheque booklets from offenders and file their records with the Credit Risk Management System (CRMS) as well as at least two private credit bureaux.
The guidelines propose even tougher penalties for repeat offenders, stating that any customer who issues another dud cheque after completing a previous five-year ban will face an additional five years of sanction for each subsequent violation.
Unbarring will only occur when the sanction period expires or when a financial institution confirms that a reported dud cheque was recorded in error. Banks will be required to update the customer’s status with credit bureaux and issue formal notification once the sanction is lifted.
The policy also includes penalties for financial institutions that fail to comply. Banks that neglect to enforce restrictions will face a minimum fine of ₦5 million, while those opening current accounts without conducting a CRMS status check will pay a minimum fine of ₦3 million.