The Central Bank of Nigeria (CBN) has unveiled a draft compliance framework aimed at reducing the rising incidence of dishonoured cheques, including a proposal to impose a five-year ban on customers who repeatedly issue cheques that bounce due to insufficient funds.
The draft guideline, released on Monday in Abuja and signed by Rita I. Sike, Director of the Financial Policy and Regulation Department, forms part of the apex bank’s efforts to strengthen supervisory oversight of cheque-based transactions. Stakeholders have been invited to submit feedback within three weeks as part of an open consultation process.
The proposed rules, framed under the CBN Act 2007 and the Banks and Other Financial Institutions Act 2020, are intended to update earlier measures on dishonoured cheques. The guidelines aim to reinforce market discipline, improve risk management, and restore confidence in cheque payments, which have long been affected by repeated payment failures.
A dud cheque, under the new definition, is strictly one that bounces because of insufficient funds. A customer will be considered a serial offender after three such incidents recorded across the financial system. Those designated as serial offenders would face a five-year suspension from the cheque clearing system, be barred from accessing credit, and be prevented from opening current accounts. Any subsequent infractions following the ban would result in another five-year restriction.
The framework places responsibilities on financial institutions to report dud cheque incidents promptly. Banks and other licensed institutions must submit reports to the CBN’s Credit Risk Management System within one hour of the dishonour, and also notify at least two licensed credit bureaux. Customers are to be informed of the bounced cheque within two working days, with removal from the defaulters’ list permitted after five years or upon verification of erroneous reporting.
Under the draft, the CBN will maintain the central database, enforce sanctions, and resolve disputes, while banks are required to conduct rigorous due diligence when opening accounts, integrate cheque history into credit risk assessments, and implement operational controls, including the cancellation of unused cheque leaves. Credit bureaux are tasked with storing and releasing relevant data, and customers are urged to ensure sufficient funds before issuing cheques.
Financial penalties for non-compliance range from ₦100,000 to ₦5 million, depending on the severity of the breach. Credit bureaux may face fines of up to ₦2 million, and compliance officers and chief technology officers will be held accountable for reporting accuracy and system readiness.
According to analysts, the framework could reduce fraud, enhance the culture of creditworthiness, and strengthen confidence in Nigeria’s payment ecosystem if fully implemented. Its effectiveness, however, will depend on digital integration, inter-institutional cooperation, and sustained regulatory oversight.
