The Central Bank of Nigeria (CBN) has threatened to prosecute bank customers that are of the habit of issuing cheques against unfunded accounts.
In fact, the apex bank expressed concern over the unfortunate development, saying that over 167,507 dud cheques, with total value of N166 billion were processed by Deposit Money Banks (DMBs) between January 2012 and December 2012.
Therefore, it directed banks to forward details of erring customers to the Economic and Financial Crimes Commission (EFCC) for investigation and prosecution.
The CBN stated this in a document titled: “Re: Circular to Banks and Other Financial Institutions on Dud/Dishonoured Cheques,” dated July 5, 2013, a copy of which was posted on its website Wednesday.
The apex bank also observed that the “enormous volume of dishonoured cheques in the financial sector has shown no sign of abating.” It urged financial institutions to ensure that prospective customers (at the point of account opening) and existing customers pledge not to issue cheques against unfunded accounts.
The CBN added: “By way of enforcement, financial institutions are required to monitor cheque transactions in their customers’ accounts in order to identify those customers that have issued cheques against unfunded accounts on three instances with effect from the date of this letter, and render monthly report to the Director, Financial Policy and Regulation Department, CBN.
“They should also report on the affected customers’ profile, transaction history and attach copies of both the front and back of the financial instrument used. Customers of financial institutions should be informed that henceforth, the CBN, in order to check this malaise in the banking sector will forward the account details of erring customers to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution.”
The implication of this development, according to the CBN was the low confidence generated in the use of financial instruments, which it stressed adversely affects its ongoing cashless policy.
“The CBN wishes to note that the over-indulgence of cash in our economy tends to increase the cost of banking services, raise the incidence of crime and facilitate money laundering by obliterating the audit trail.
“It is on this note that the Bank, in liaison with financial institutions and law enforcement agencies, has taken appropriate steps to stem the tide of dud cheques issuance as it will adversely affect the stability of the financial system, if left unchecked,” it declared.