The Central Bank of Nigeria (CBN) is working on a policy that would impose a five-year ban on ‘serial dud cheque issuers’.
Under the proposed penalty clause a customer is designated ‘serial dud cheque issuer’ when he/ she issues cheques three times and they are not honoured due to insufficient funds.
The CBN announced this in an exposure draft of its planned ‘Guidelines on the Treatment of Dud Cheques’ released yesterday, which empowers banks and other financial institutions to blacklist individuals who issue such cheques.
According to the proposed guidelines, offenders will be denied access to the cheque clearing system, barred from obtaining credit from any bank, and restricted from opening current accounts throughout the five-year sanction period. Banks are also required to impose applicable returned-cheque charges as stipulated in the national Guide to Charges.
CBN mandated all commercial, merchant, non-interest, mortgage and microfinance banks to enforce the sanctions, retrieve unused cheque leaves, and file offenders’ records on the Credit Risk Management System (CRMS) and at least two private credit bureaux.
The guidelines also stipulated tougher sanctions for recalcitrant offenders, stating that any customer who issues another dud cheque after completing a previous five-year ban will face an additional five-year sanction each time the offence is repeated.
Conditions for unbarring are limited to the expiration of the sanction period or verified erroneous reporting by a financial institution. Banks must update the customer’s status with the credit bureaux and issue formal notification upon expiry.
The guidelines also prescribe heavy penalties for banks that fail to comply, namely N5 million minimum fine for failure to enforce restrictions; N3 million minimum fine for opening a current account without conducting a CRMS status check.
