The Central Bank of Nigeria (CBN) is proposing a tough new clampdown: individuals who issue bounced cheques (dud cheques) three times would face a five-year ban. Under the draft “Guidelines on the Treatment of Dud Cheques”, serial offenders would lose access to the cheque clearing system, be barred from obtaining credit, and be restricted from opening current accounts.
The proposed policy labels a customer a “serial dud cheque issuer” only after three dishonoured cheques due to insufficient funds. These offenders will also have their cheque books recalled.
Financial institutions are expected to report any dud cheque to Nigeria’s Credit Risk Management System (CRMS) and at least two private credit bureaus within one hour of detection. When a customer is flagged, the bank must notify them within two working days, explaining the reason for the dishonour.
Banks will keep a copy of the dud cheque for at least five years, while the original is returned to the payee. If a customer serves their initial five-year ban but then issues another dud cheque, the penalty resets: they face another five-year ban and could repeat the cycle indefinitely.
To enforce this, the CBN is imposing penalties on banks that fail to comply. For instance, commercial, merchant, and non-interest banks risk a minimum N3 million fine for failing to check a customer’s CRMS status before opening a current account.
Offenders cannot be removed from the blacklist before their sanction expires, unless there was an erroneous reporting by a financial institution. Once the five-year period lapses, the customer’s status must be updated with the credit bureaus and formal notification sent.
This policy aims to strengthen banking discipline and reduce cheque-fraud losses nationwide, which could lower systemic risk. By blacklisting serial offenders, the CBN is safeguarding financial institutions and credit markets, potentially boosting investor confidence and improving liquidity flow, critical for Nigeria’s fragile economic stability.
