The Central Bank of Nigeria (CBN) has announced a major regulatory crackdown on customers who repeatedly issue cheques that bounce due to insufficient funds. The apex bank's new draft framework proposes a five-year ban from the cheque clearing system for serial offenders as part of efforts to restore integrity to cheque-based transactions.
Key Provisions of the New Framework
Released in Abuja on Monday and signed by Rita I. Sike, Director of the Financial Policy and Regulation Department, the draft guideline defines a serial offender as any customer with three recorded incidents of dishonoured cheques across the financial system. Beyond the five-year suspension from cheque clearing, these offenders will face additional consequences including being barred from accessing credit facilities and prevented from opening new current accounts.
The framework, developed under the CBN Act 2007 and the Banks and Other Financial Institutions Act 2020, represents a significant upgrade to existing measures against dud cheques. Financial institutions now face strict reporting requirements, mandating them to submit reports to the CBN's Credit Risk Management System within one hour of a cheque dishonour and notify at least two licensed credit bureaux.
Enforcement and Penalties
The CBN will maintain a central database of offenders and enforce sanctions, while banks are required to conduct rigorous due diligence when opening accounts and integrate cheque history into credit risk assessments. Customers designated as serial offenders who commit subsequent infractions after their ban will face another five-year restriction from the system.
Financial penalties for non-compliance are substantial, ranging from ₦100,000 to ₦5 million depending on the severity of the breach. Credit bureaux may face fines of up to ₦2 million, while compliance officers and chief technology officers will be held personally accountable for reporting accuracy and system readiness.
Broader Impact and Stakeholder Feedback
According to financial analysts, the framework could significantly reduce fraud and enhance the culture of creditworthiness in Nigeria's payment ecosystem if properly implemented. The effectiveness of these measures will depend on digital integration, cooperation between institutions, and sustained regulatory oversight.
The CBN has invited stakeholders to submit feedback on the draft guidelines within three weeks as part of an open consultation process. Customers are urged to ensure sufficient funds before issuing cheques to avoid being listed in the defaulters' database, though removal is permitted after five years or upon verification of erroneous reporting.
