The Central Bank of Nigeria (CBN) has unveiled sweeping punitive measures to curb the rising incidence of dud cheques, proposing automatic and repeatable five-year bans for individuals who habitually issue cheques that bounce due to insufficient funds.
The measure, contained in a newly released exposure draft titled Guidelines on the Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria, represents one of the most far-reaching regulatory steps taken in recent years to restore public confidence in cheque-based transactions.
The proposed guideline, issued pursuant to the CBN Act 2007 and the Bank and Other Financial Institutions Act (BOFIA) 2020, supersedes all previous circulars on the handling of dud cheques. It aims to tighten reporting timelines, enforce transparency, and reintroduce strict financial discipline across banks and other financial institutions.
Under the draft, banks must report any cheque found to be a dud—defined as one dishonoured due to lack of funds—to the Credit Risk Management System (CRMS) and at least two private credit bureaus within one hour of detection.
Financial institutions are also mandated to notify the customer involved within two working days through a verifiable channel, detailing the reason for the dishonour.
To ensure transparency and future reference, every bank must keep a copy of the dishonoured cheque for a minimum of five years.
Additionally, banks must educate all prospective cheque users on the consequences of issuing dud cheques before issuing cheque books.
A critical part of the regulation is the classification of “serial dud cheque issuers.” A customer becomes one after issuing three dud cheques across the banking system. Once classified, the CRMS will immediately alert all banks and financial institutions, triggering instant system-wide restrictions.
The reporting bank is required to notify the customer of their new status within two working days and ensure the classification is mirrored across all credit bureaus.
Under the new sanctions framework, individuals classified as serial offenders will face a mandatory five-year ban from accessing cheque-clearing services, opening current accounts, or obtaining loans from any financial institution.
Perhaps the most notable provision is the renewable sanction for reoffenders. The draft states that if an individual issues another dud cheque after completing a previous five-year ban, they will be banned for another five years for each subsequent offence.
This introduces an unlimited penalty cycle, capable of locking chronic offenders out of the formal financial system indefinitely.
The proposed guideline does not spare financial institutions. Banks that fail to fulfil their obligations—including failing to report incidents promptly, failing to notify customers, issuing accounts without conducting CRMS checks, or failing to cancel unused cheque leaves—face fines ranging from N1 million to N5 million per violation, depending on institutional category.
Credit bureaus may also be fined up to N2 million for failing to maintain accurate and up-to-date records of dud cheque issuers.
The CBN has opened the exposure draft to stakeholder input for three weeks. The document, available on the apex bank’s website, invites submissions to the Financial Policy and Regulation Department.
According to the central bank, the new framework is intended to deter systemic abuse, strengthen the credibility of the payments system, and enforce greater accountability across the industry.
If adopted, the guideline could reshape the culture of financial responsibility in Nigeria, signalling a tougher era for cheque users who disregard the rules—and for institutions that fail to enforce them.
