Two important things about CBN guideline on dud cheques

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A draft of new regulations intended to reduce the issuing of fraudulent checks and improve financial discipline throughout the banking industry has been released by the Central Bank of Nigeria.

On Monday, the suggested framework was made available for industry evaluation.

Guidelines on the Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria is an exposure draft that includes it.

The CBN defines a serial offender as anyone who issues three dishonored checks through the banking system. According to reports, one of the main requirements is a five-year ban for consumers who consistently issue dud checks.

Stricter sanctions for banks and other financial organizations were also included in the text.

Crucially, violations include creating accounts without conducting adequate status checks, failing to cancel unused check leaves, failing to report a dud cheque within the allotted time, and failing to notify impacted consumers might result in fines ranging from N1 million to N5 million per event.

The draft states that the issuing bank must notify the Credit Risk Management System and two licensed credit bureaux within an hour of a check being verified as a dud due to inadequate funds. Additionally, institutions must keep copies of dishonored checks for a minimum of five years and notify the consumer via a verifiable communication channel within two working days.

In an effort to improve due diligence and lessen abuse during the onboarding process, banks will now have to inform account holders of the repercussions of issuing bogus checks prior to providing check books.

All prior circulars on the administration of dud checks are anticipated to be replaced by the proposed guideline, which was released under the CBN Act 2007 and the BOFIA 2020 framework.

It seeks to strengthen compliance standards, rebuild confidence in check transactions, and lessen ongoing abuses that authorities claim persist in spite of established legal safeguards.

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