The Central Bank of Nigeria has issued guidelines on the treatment of dud cheques by banks and other financial institutions, setting a common framework for reporting, barring and unbarring customers whose cheques are returned for insufficient funds and superseding earlier CBN circulars on dud and dishonoured cheques. The rules apply to banks and other financial institutions under the Banks and Other Financial Institutions Act 2020, including commercial, merchant and non-interest banks, primary mortgage banks and microfinance banks. A “dud cheque” is defined as a cheque dishonoured solely due to insufficient funds, while a “serial dud cheque issuer” is a customer who has issued a dud cheque three times in the banking system. Participating financial institutions must report a dud cheque within one hour via the CBN Credit Risk Management System and to private credit bureaux, notify the customer within two working days, and enforce restrictions once a customer is barred, including loss of access to the clearing system, banking-sector credit and the ability to open a current account. The reporting institution must cancel unused cheque leaves, retain a copy of the dud cheque for at least five years (returning the original to the payee), and perform status checks on the database before opening current accounts. Erroneous reports require prior CBN approval and must be corrected within 24 hours of approval, while unbarring occurs at the end of a five-year period or where a bar resulted from erroneous reporting, with repeat offences triggering a fresh five-year bar each time. The guidelines also introduce sanctions and accountability expectations. Serial dud cheque issuers are barred for five years (in addition to returned-cheque charges under the Guide to Charges), while commercial, merchant and non-interest banks face minimum penalties of NGN 2,000,000 per infraction for several compliance failures, rising to NGN 3,000,000 for failing to conduct pre-account-opening status checks and NGN 5,000,000 for failing to enforce restrictions. Primary mortgage banks and microfinance banks are subject to tiered minimum penalties depending on institution type and breach, and private credit bureaux face minimum penalties of NGN 1,000,000 per infraction for failing to maintain dud cheque records and NGN 2,000,000 for failing to make serial issuer records available.
Central Bank of Nigeria 2025-11-24
Central Bank of Nigeria sets one-hour reporting and five-year barring regime for dud cheques with minimum NGN 2,000,000 bank penalties
The Central Bank of Nigeria issued guidelines for handling dud cheques, establishing a framework for reporting and barring customers with insufficient funds. The rules apply to various financial institutions and mandate reporting dud cheques within one hour, notifying customers within two days, and enforcing restrictions on barred customers. Penalties for non-compliance range from NGN 1,000,000 to NGN 5,000,000, depending on the institution and infraction.