The Central Bank of Nigeria (CBN) has proposed a five-year ban for customers who repeatedly issue dud cheques among other new compliance guidelines to curb the rising incidence by customers issuing cheques for unfunded bank accounts.
The draft guideline, released by the apex bank on Monday,November24,2025, in Abuja and signed by Rita Sike, Director of the Financial Policy and Regulation Department, marks a tougher supervisory stance by the apex bank.
Designed under the CBN Act 2007 and the Banks and Other Financial Institutions Act 2020, the proposed framework updates earlier rules on dishonoured cheques.
It aims to deepen market discipline, improve risk management, and restore public confidence in cheque-based transactions, an area long troubled by payment failures that slow settlements and weaken trust across the financial system.
Although the Dishonoured Cheques (Offences) Act of 1977 already provides criminal sanctions, including imprisonment, the CBN is shifting focus toward regulatory deterrence.
A 2023 Senate bill had attempted to replace jail terms with fines, underscoring a long-running debate over punitive measures.
The latest draft instead targets operational restrictions, positioning the policy as a preventive tool to discourage payment abuse.
Under the proposal, a dud cheque is defined as one that bounces strictly due to insufficient funds.
A customer becomes a serial offender after three such incidents across the financial system.
Those flagged would face a five-year suspension from the cheque clearing system, be barred from obtaining credit, and be prevented from opening current accounts.
Any subsequent violation after the ban would trigger another five-year restriction.
To strengthen oversight, banks and other financial institutions must report dud cheque incidents to the CBN’s Credit Risk Management System within one hour and submit the same to at least two licensed credit bureaux.
Customers must be notified of dishonoured cheques within two working days.
Removal from the defaulters’ list is permitted after five years or upon confirmation of erroneous reporting.
The draft assigns clear responsibilities across the compliance chain. The CBN will maintain the central database, enforce sanctions, and resolve disputes in line with consumer protection regulations.
Banks must conduct thorough due diligence when opening accounts, incorporate dud cheque history into credit risk assessments, and implement controls such as cancelling unused cheque leaves.
Credit bureaux are expected to store and release data upon request, while customers are urged to ensure their accounts are funded before issuing cheques.
Financial penalties for non-compliance range from ₦100,000 to ₦5 million, depending on the nature and severity of infractions.
Credit bureaux could face fines of up to ₦2 million per breach.
Compliance officers and chief technology officers will be held accountable for reporting accuracy and system readiness.
Analysts say the framework, if effectively implemented, could curb fraud, strengthen credit culture, and enhance confidence in Nigeria’s payment ecosystem.
However, its success will depend on seamless digital integration, inter-institutional cooperation, and sustained regulatory engagement.
