CBN frowns at dud cheques, seeks tougher sanctions for defaulters

The Central Bank of Nigeria (CBN) on Wednesday decried the huge volume of dishonored cheques in the financial sector saying that that the issuance of such cheques should be discouraged as it could erode the confidence in the banking system.

The apex bank also called for a review of the Dishonoured Cheque Offences Decree of 1977 as the law in its current form could not effectively discourage the issuance of dud cheques.

The law, which was passed about 37 years ago, stipulates the framework for ensuring strict eradication of dishonoured cheques in the financial system.

Statistics from the apex bank obtained on Wednesday showed that Deposit Money Banks processed dud cheques valued at N166bn between January and December 2012.

The Deputy Governor, CBN, Mr. Suleiman Barau, said in Abuja, through the Director, Legal Services, CBN, Mr. Simon Onoketu, at a two-day national stakeholders' workshop on dishonoured cheques in Nigeria that enforcing the law on dud cheques was still a big challenge to the banking sector.

He said, 'The seminar is to create awareness about the issuance of dud cheques. The implications of dud cheques for the central bank is that it erodes confidence in the banking sector and the expectation is that the gathering should be able to sensitise the general public to the challenges dud cheques pose to the entire economy.

'Now, for the beneficiary, you will feel disappointed that you have been taken advantage of and what it does is that the next time somebody issues a cheque to you, you will no longer want to take that cheque and it has the effect of eroding confidence.

'And for us as a monetary authority, the central bank wants as much as possible to have a system where dud cheques are discouraged.

'As we have noted, there are a lot of flaws in the law as we have it and so we expect that the outcome of this workshop will give us a platform that will enable us to have a legislation that would be robust enough to address all the shortcomings that we have identified with this law.'

He, however, said that the apex bank had begun to use the apparatus in the banking sector to discourage the issuance of dud cheques.

Barau said, 'Generally, enforcement is a big challenge for us as a country. But what the regulatory authority has done is to ensure that we use the apparatus of the banking system to say if on three occasions, you issued a dud cheque, you should not be allowed to have anything to do with the banking system.

'Now, what that does is that you are marked as somebody who has the propensity to run down the banking system and so what we are trying to enthrone is a situation where you are reported formally to the Economic and Financial Crimes Commission, for instance, and what that does is that you will be prosecuted.

'So, we expect that once the arrangement that we have put in place works, we will get to a point where people will know that if you issue dud cheques, you are likely to end up in prison.'

The Chairman, Independent Corrupt Practices and Other Related Offences Commission, Mr. Ekpo Ita, also expressed concern about the obsolete law.