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In November 2025, the Central Bank of Nigeria (CBN) introduced stringent regulations targeting the persistent issue of bounced cheques caused by insufficient funds. Under these new directives, individuals who issue three dishonoured cheques will face a strict five-year prohibition from accessing banking services.
Consequences for Repeat Offenders
Those identified as habitual issuers of dud cheques will be excluded from the clearing system-a critical infrastructure that enables the processing and settlement of payments such as cheques and automated clearing house transactions. Additionally, these customers will be denied all forms of bank credit and barred from opening current accounts for a minimum of five years, effectively restricting their participation in the formal banking sector.
The Resurgence of Cheque Usage Amid Digital Payments
Despite the global shift towards digital payment solutions, cheques are experiencing a notable revival in Nigeria. Recent data from the CBN reveals that the total value of cheques issued surged to ₦5.15 trillion (approximately $3.55 billion) in the first quarter of 2025, marking a 51.43% increase compared to the same period in 2023. This resurgence underscores the continued relevance of cheques while highlighting the challenges posed by dishonoured payments that the new regulations aim to mitigate.
Rationale Behind the New Regulations
The CBN emphasized that the persistent issuance of dud cheques, despite existing laws such as the Dishonoured Cheques (Offences) Act of 1977 and previous regulatory measures, necessitated stronger enforcement. The central bank stated, “The repeated disregard by some bank customers and financial institutions for the provisions governing cheque issuance has compelled us to implement more robust deterrents to curb this malpractice.”
Mandatory Reporting and Penalties for Banks
Financial institutions are now obligated to report any dishonoured cheque within one hour to the CBN’s Credit Risk Management System or any designated platform. Furthermore, they must notify at least two credit bureaus and inform the affected customers within two business days. Failure to comply with these reporting requirements, neglecting to alert customers, bypassing database checks before account openings, or not revoking cheque privileges for barred clients will attract fines ranging from ₦2 million ($1,375.67) to ₦5 million ($3,439.17) per violation. The highest penalty applies when banks fail to enforce restrictions on repeat offenders.
Accountability of Bank Executives
The CBN has also declared that executive compliance officers and chief technology officers within financial institutions will bear personal responsibility for any breaches of these guidelines. This move aims to enhance accountability and foster trust in cheques as a dependable payment method.
Strengthening Financial Sector Integrity
This updated directive supersedes all previous circulars related to dishonoured cheques and forms part of the CBN’s broader strategy to reinforce regulatory oversight and safeguard the integrity of Nigeria’s financial system.
