Emmanuel Thomas l Tuesday, June 20, 2017
LAGOS, Nigeria – The Central bank of Nigeria, CBN has outlined stiffer penalties for customers who issue dud cheques over the counter.
The new policy is contained in a new circular in which the apex bank advised banks in Nigeria to charge customers N5,000 or one percent of the total value of the dud cheque, whichever is higher.
In the circular, the CBN directed that all banks to commerce charges on all returned cheques presented. over the counter.
This new policy replaces CBN directive issued on 28th June, 2016.
Key points in the former directive were that all banks were required to
1. Perform status check on all potential customers to ensure they are not dud cheques issuers before granting credit facilities to them or opening an account for them,
2. Forward the details of cheques issued by a customers and returned“insufficient funds”whether presented over the counter or through a licensed Credit Bureaux and the Credit Risk Management System (CRMS) on monthly basis,
3. Cancel all unissued cheque books of customers who have issued dud cheques three (3) consecutive times or more across banks, and
4. Prevent all inter-bank cheques issued by such customer for a period of five (5) years.
The guidelines also provides that the details of offending customers will be listed in the database for a period of five (5) years from the date of submissions after which the name will be eligible for removal. Also subsequent default following a removal of an offenders name from the list will attract a permanent listing of such defaulter in the Credit Bureaux database and such defaulter can only be removed from the listing with the approval of the Central Bank.
It is also worth noting that, the principal legislation criminalising the issuance of dud cheques is the 1977 Dishonoured Cheques (Offences) Act. The rather brief law makes it an offence for any person anywhere in Nigeria to induce the delivery of any property or to purport to settle lawful obligations by means of a cheque which when presented within a reasonable time is dishonoured on the grounds that no funds or insufficient funds were standing to the credit of the drawer of the cheque. This law has however been sparsely tested with the sad consequence that there are professional debtors who obtain services under the pretense that the cheques they issue will consequently be honoured by the banks.
The crux and key provisions of the Dishonoured Cheques (Offences) Act are as follows:
1. Section 1 of the Act makes it an offence to obtain delivery of goods or credit by means of a cheque that, when presented for payment not later than three months after the date of the cheque, is dishonoured on the ground that no funds or insufficient funds were standing to the credit of the drawer of the cheque in the bank on which the cheque was drawn;
2. An individual found guilty of this crime is liable to imprisonment for two years, without the option of a fine;
3. A body corporate found guilty of this crime is liable to be sentenced to a fine of not less than N5,000. Note that a minimum fine is prescribed by the law; a judge may apply discretion to increase the fine applicable on a case by case approach; and
4. The Act in Section 2however provides for the lifting of the corporate veil where the offence involves a body corporate. It provides that “where the offence is committed by a body corporate is proved to have been committed with the consent of or connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other similar officer, servant or agent of the body corporate (or any person purporting to act in any such capacity), he, as well as the body corporate, shall be deemed to be guilty of the offence and may be proceeded against and punished in the same manner as an individual.”
