CBN Cracks Down on Cheque Processing Errors, Banks Face Penalties Starting Nov 1

• The CBN will begin to penalise banks for using equipment that causes image and data distortion during the cheque truncation process
• The new sanctions will be implemented from November 1 and affect all commercial banks
• The usage of cheques as a payment system has plummeted in Nigeria in recent years

The Central Bank of Nigeria (CBN) will sanction Deposit Money Banks (DMBs) for using equipment that causes distortions in images and data during the cheque truncation process as from November 1, 2023.

Cheque truncation is a clearance system that involves digitising a physical paper cheque into a substitute electronic form for transmission to the paying bank.

The CBN stated this in a circular titled "Circular on the revised Nigeria Cheque Standards (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS): Magnetic Ink Character Recognition (MICR) reject".

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According to the CBN, the penalty aims to reduce the reported increase in MICR failures in banks.

CBN message to banks

The apex bank also advised DMBs to examine their in-house cheque processing equipment to calibrate and supervise them properly.

The circular signed by the Director of the Banking Services Department, Sam Okojere, reads:

“Recall that the CBN issued the NCS and NICPAS, version 2.0 on 18th of September, 2018 to increase the efficiency and security of the Nigeria Clearing System.

“We have observed a growing trend in the rejection of MICR codes. As part of our ongoing efforts to minimize these rejections, we instruct Deposit Money Banks (DMBs) to reach out to their personalizers and emphasize the importance of verifying the accuracy of MICR code details in accordance with NCS and NICPAS version 2.0.

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“Furthermore, both the presenting and receiving banks should also thoroughly examine their in-house cheque processing equipment to ensure that they are properly calibrated and supervised to eliminate distortion of image and data being transmitted during the cheque truncation process.

“Note that the bank will monitor compliance with the provision of this circular and any bank with MICR reject starting from 1st November, 2023 would be penalized in accordance with the Sanctions Grid. Please be guided accordingly.”

CBN removes company responsible for new naira notes from cheque printing list

In another development, the CBN has removed the NSPMC from the list of companies approved to print cheques.

NSPMC is responsible for printing Nigeria's currency, including the recently introduced N1000, N500, and N200 notes.

Source: Legit.ng