Regulator Frowns on Issuance of Dud Cheques
CBN Office
By Obinna Chima
The Central Bank of Nigeria (CBN) has rolled out punitive measures for
bank customers that are fond of issuing cheques against unfunded
accounts.
The central bank, which stated this in a letter to all banks posted on its website recently, said it had noted with great concern the impunity with which some bank customers issue dud cheques on their accounts despite the provisions of the Dishonoured (Dud) Cheques Act of 1977 and CBN's recent directives to banks’ customers to desist from such practice.
The central bank, which stated this in a letter to all banks posted on its website recently, said it had noted with great concern the impunity with which some bank customers issue dud cheques on their accounts despite the provisions of the Dishonoured (Dud) Cheques Act of 1977 and CBN's recent directives to banks’ customers to desist from such practice.
It therefore stated that in order to sustain the positive achievements
already recorded in the Nigerian Payment System, it was essential that
confidence and integrity in the country’s negotiable instruments,
especially cheques, be restored and enhanced.
In addition, the CBN disclosed that it had already started compiling
and disseminating information on the serial issuers of dud cheques based
on banks’ returns, adding that on completion of the compilation
process, the financial institutions would be required to among other
things, recall/cancel all unused cheque books issued to the serial
issuers of dud cheques.
Also, the banks would bar the affected customers from use of the
clearing system for a period of five years and forward the names of the
dud Cheque offenders to the three private credit bureaux and the Credit
Risk Management System (CRMS).
“The customers’ names would be listed on the database of the private
credit bureaux and CRMS for a period of five years from the date of
submission, after which offenders will be eligible for removal. However,
if the offender is found wanting after the name is removed, such an
offender shall be permanently reinstated in the data base of both the
three credit bureaux and the CRMS.
“Bar the serial issuers of dud cheques from accessing credit facilities
from the banking system for a period of five years. No institution
shall, except with the prior written approval of the CBN, remove such a
person’s name from the three CRMS.
“Perform status check on a potential customer from CRMS and at least
two credit bureaux before on-boarding a customer,” the central bank
stated.
Furthermore, in line with the punitive measures, the central bank pointed out that where an institution fails to report a serial dud cheque issuer in its return to the CBN CRMS and the private credit bureaux as required, it shall be considered as concealment and misrepresentation of material fact, adding that the affected institution shall be penalised in accordance with the relevant provisions of the Banks and Other Financial Institutions Act, LFN 2004 CAP B3 (BOFIA).
Furthermore, in line with the punitive measures, the central bank pointed out that where an institution fails to report a serial dud cheque issuer in its return to the CBN CRMS and the private credit bureaux as required, it shall be considered as concealment and misrepresentation of material fact, adding that the affected institution shall be penalised in accordance with the relevant provisions of the Banks and Other Financial Institutions Act, LFN 2004 CAP B3 (BOFIA).
In addition, the Chief Executive Officer (CEO), Chief Financial Officer
(CFO), Chief Compliance Officer (CCO) and Chief Risk Officer (CRO)
shall be liable to sanctions in line with the relevant provisions of the
BOFIA.
“Any Institution that contravenes the above directives shall be
appropriately sanctioned. The measures are effective from the 1st of
April 2015,” it added.
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