The Central Bank of Nigeria (CBN) is developing a policy that will impose a five-year ban on individuals classified as “serial dud cheque issuers.”
Under the proposed penalty clause, a customer is designated a serial dud cheque issuer after issuing cheques three times that are not honoured due to insufficient funds.
The CBN announced this in an exposure draft of its planned Guidelines on the Treatment of Dud Cheques released yesterday, empowering banks and other financial institutions to blacklist individuals who issue such cheques.
According to the proposed guidelines, offenders will be denied access to the cheque clearing system, barred from obtaining credit from any bank, and restricted from opening current accounts throughout the five-year sanction period. Banks are also required to impose applicable returned-cheque charges as stipulated in the national Guide to Charges.
The CBN mandated all commercial, merchant, non-interest, mortgage, and microfinance banks to enforce the sanctions, retrieve unused cheque leaves, and file offenders’ records on the Credit Risk Management System (CRMS) and at least two private credit bureaux.
The guidelines also introduce tougher penalties for repeat offenders. Any customer who issues another dud cheque after completing a previous five-year ban will face an additional five-year sanction each time the offence is repeated.
Conditions for unbarring are limited to the expiration of the sanction period or verified erroneous reporting by a financial institution. Banks must update the customer’s status with the credit bureaux and issue formal notification once the ban expires.
The guidelines prescribe heavy penalties for banks that fail to comply, including a minimum fine of N5 million for failure to enforce restrictions and a minimum fine of N3 million for opening a current account without conducting a CRMS status check.