The Central Bank of Nigeria (CBN) has unveiled tough new measures aimed at curbing the persistent misuse of cheques, including the introduction of automatic five-year banking restrictions for repeat offenders, with each fresh violation triggering a brand-new ban.
The proposals are contained in an exposure draft of the “Guidelines on the Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria,” published on Monday for public and industry comments.
According to the draft, any individual who issues three dishonoured cheques due to insufficient funds anywhere in the Nigerian banking system will be classified as a “serial dud cheque issuer.” Once flagged, the person will immediately be blacklisted for five years, barred from using the cheque clearing system, opening new current accounts, or accessing credit facilities from any bank or financial institution.
Most notably, the sanctions do not expire permanently. If a previously banned customer issues another dud cheque after serving the initial penalty and being removed from the blacklist, a fresh five-year ban will be imposed for every new offence – effectively creating the possibility of decades-long exclusion from mainstream banking for chronic offenders.
The CBN said the revised rules, issued under the powers of the CBN Act 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020, will replace all previous circulars on the subject and are designed to restore public trust in cheques as a payment instrument.
Stricter Reporting and Record-Keeping Obligations
Banks will now be required to report every dishonoured cheque to the Credit Risk Management System (CRMS) and at least two licensed private credit bureaus within one hour of confirmation that funds are insufficient.
Customers must be formally notified of the dishonour within two working days through verifiable channels, while banks are mandated to keep physical or electronic copies of dishonoured cheques for a minimum of five years.
Financial institutions will also be compelled to warn every customer about the consequences of issuing dud cheques before handing over new cheque books.
Heavy Fines for Non-Compliant Institutions
To ensure enforcement, the draft imposes monetary penalties on banks and credit bureaus that breach the rules. Fines range from ₦1 million to ₦5 million per violation, depending on the nature and size of the institution. Credit bureaus that fail to maintain accurate records face sanctions of up to ₦2 million.
Industry Feedback Window
The CBN has opened a three-week consultation period for stakeholders to submit comments on the draft, which is available on the apex bank’s website. Responses should be addressed to the Director, Financial Policy and Regulation Department.
In a statement accompanying the release, the regulator emphasised that the new framework forms part of broader efforts to strengthen discipline in the payments ecosystem and protect the integrity of Nigeria’s financial system.
