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The Central Bank of Nigeria (CBN) is seeking tougher penalties for individuals who repeatedly issue dud cheques, proposing an automatic five-year ban for every subsequent offence under a new draft guideline released on Monday.
The document, titled Guidelines on the Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria, has been circulated for industry consultation and is intended to reinforce financial discipline and restore trust in cheque-based transactions. Despite longstanding restrictions, the CBN noted that dud cheque issuance remains widespread.
Issued under the CBN Act 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020, the draft replaces all previous directives on the handling of dud cheques.
Under the new rules, once a cheque is confirmed to be dishonoured due to insufficient funds, the issuing bank must report the incident to the Credit Risk Management System (CRMS) and at least two licensed credit bureaus within one hour. The customer must also be notified within two working days via a verifiable channel with full details of the breach. Banks are required to retain copies of dishonoured cheques for a minimum of five years and must clearly warn customers about the consequences before issuing cheque books.
A customer will be labelled a “serial dud cheque issuer” after issuing three dud cheques across the financial system. Once flagged, all banks will be immediately alerted through the CRMS, triggering a mandatory five-year prohibition on opening current accounts, accessing the clearing system, or obtaining credit facilities.
Notably, the CBN proposes that any offender who issues another dud cheque after completing their initial five-year restriction will face an additional five-year ban each time, with no limit on how often the penalty can be renewed.
The guideline also outlines financial penalties for banks and credit bureaus that fail to comply with reporting requirements. Sanctions for banks range from ₦1m to ₦5m per violation, while credit bureaus may face fines of up to ₦2m for incomplete or inaccurate reporting.
The draft will remain open for stakeholder submissions for three weeks via the CBN’s Financial Policy and Regulation Department. The bank says the reforms are intended to strengthen compliance, protect the payment system, and deter the persistent misuse of cheques.
