Three Bounced Cheques Can Get You Banned from Bank Credit for Five Years
The Central Bank of Nigeria (CBN) has released a new regulatory guideline that imposes a five-year ban on any bank customer who issues three cheques that bounce due to insufficient funds. The measure, now formally introduced by the apex bank, represents one of the most stringent crackdowns on dud-cheque offences in recent years.
According to guideline in the CBN’s exposure draft, an individual classified as a “serial dud cheque issuer” will face an automatic, system-wide restriction once three dishonoured cheques are recorded across any financial institution.
Under the new regime, such customers will:
lose access to the cheque-clearing system;
be barred from obtaining credit from banks and other financial institutions;
be prohibited from opening new current accounts for a minimum of five years.
The CBN explained that the rule is part of a broader effort to restore confidence in cheque-based transactions, noting a recent uptick in the use of cheques and an accompanying rise in cases of dishonoured instruments. The regulator said the integrity of cheque payments must be protected in order to maintain trust in the financial system.
In addition to sanctioning offenders, the guideline places fresh compliance duties on banks. All financial institutions must now report any bounced cheque to the Credit Risk Management System (CRMS) and at least two licensed credit bureaus within one hour of the cheque’s dishonour. Failure to do so may expose the bank to monetary penalties and regulatory sanctions.
Banks are also required to verify the dud-cheque status of prospective customers before opening any current account—an obligation meant to prevent blacklisted individuals from bypassing system-wide restrictions.
The five-year ban may be renewed for additional five-year cycles if a customer, after the expiry of the initial sanction, issues another dishonoured cheque.
The new framework replaces earlier circulars on dud cheques and is expected to enhance risk management, deter misuse of cheques as informal credit instruments, and strengthen the overall payment system.
Stakeholders are currently reviewing the exposure draft, after which the CBN is expected to issue a final version that will apply across commercial banks, non-interest banks, microfinance banks, mortgage institutions, merchant banks and other regulated entities.
