CBN Moves to Clamp Down on Serial Dud Cheque Issuers With Renewable Five-Year Bans

The Central Bank of Nigeria (CBN) has proposed a sweeping overhaul of penalties for issuing dud cheques, introducing a renewable five-year ban for individuals who repeatedly violate cheque-issuance rules across the banking system.

The proposal is contained in a new exposure draft released on Monday titled “Guidelines on the Treatment of Dud Cheques by Banks and Other Financial Institutions in Nigeria.” The document aims to restore confidence in cheque transactions, which regulators say continue to be abused despite long-standing legal restrictions.

Under the draft framework, banks will now face a strict one-hour window to report any dud cheque to the Credit Risk Management System (CRMS) and at least two licensed credit bureaus once they confirm that a cheque has bounced because of insufficient funds. Affected customers must also be notified within two working days via a verifiable communication channel.

The CBN is also tightening internal controls, directing banks to keep records of all dishonoured cheques for at least five years and to ensure customers understand the consequences of cheque abuse before issuing cheque books.

Automatic Blacklisting After Three Offences

A customer who issues three dud cheques across the financial system will automatically be classified as a “serial dud cheque issuer.”
Once flagged, the CRMS will immediately alert all institutions, triggering a sweeping set of restrictions. Offenders will be barred from opening current accounts, accessing the clearing system, or obtaining loans from any bank or financial institution for a period of five years.

Banks will also be required to update the individual’s status to private credit bureaus and notify the affected customer of the classification within two days.

Renewable Five-Year Bans for Repeat Offenders

One of the most consequential provisions applies to offenders who return to the system after completing their initial ban.

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According to the draft, anyone who issues another dud cheque after being cleared will automatically receive another five-year ban, with no cap on how many times this penalty can be applied.
This effectively locks persistent violators out of Nigeria’s formal financial system for extended stretches.

Penalties for Banks and Credit Bureaus

The draft also introduces stiff fines for banks that fail to meet reporting and compliance obligations.
Infractions such as failure to report dud cheques, failure to notify customers, or opening accounts without conducting mandatory checks attract penalties ranging from ₦1 million to ₦5 million per incident, depending on the institution involved.

Licensed credit bureaus are not exempt. They face fines of up to ₦2 million if they fail to maintain accurate and updated records of dud cheque issuers.

The CBN has opened the exposure draft for public and industry comments for three weeks. Stakeholders are expected to submit their feedback to the Director, Financial Policy and Regulation Department.

The apex bank says the revised guideline is part of a broader effort to strengthen financial discipline, enhance public trust in cheque transactions, and improve compliance across Nigeria’s financial system.