Do you issue “dud cheques?”

The CBN in a circular dated July 5, 2013 directed all banks to advise their customers against issuing “dud” cheques to third parties, that is, issuing a cheque against an unfunded account.

 According to the Central Bank of Nigeria, the volume of dishonoured cheques in the financial system continues to be of concern and has serious implications for the success of CBN’s “cash-lite” policy, aimed at reducing the volume of cash based transactions in the Nigerian economy.

As the CBN embarked on the nationwide extension of the cash-less policy, on July 1, 2014, banks have renewed their campaign to educate their customers and to sensitise them on the serious consequences should they contravene the law on the issuance of dishonoured cheques.

 Naturally, it is infuriating to be at the receiving end of a dud cheque. This makes people reluctant to accept cheques from people that they aren’t familiar with and indeed they might hesitate or even refuse to accept cheques altogether. Several retailers continue to be reluctant to accept cheques as a mode of payment.

 Bounced cheques are one of the most common offences that plague the financial world. There are various reasons why a cheque might be dishonoured including the following:

 Irregular signature

Your signature is central to your identity and should be unique. It is important to be very skilled in writing your own signature as this will help to protect you from fraud, as it will be more difficult to copy. Many of us can be somewhat careless when we sign our signature, signing in different ways and with little consistency. If your signature is irregular and does not match the banks records in the documentation that you submitted, the bank, for security reasons should return your cheque to be sure that there hasn’t been a fraudulent attempt at making a withdrawal from your account.

 Insufficient funds

It is important to keep track of your bank statements so that you have an idea of your bank balance and don’t find that you suddenly have insufficient funds to make an important payment. If you use a chequebook, you can keep a running balance on the attached cheque leaves.

 You are expecting some money to be deposited into your account and issue a cheque in anticipation of the credit. For some reason, the credit doesn’t arrive before the cheque goes in for clearing and the cheque is thus returned.

 If you share a joint account with your spouse, or other family member, or your partner, ideally all parties must keep one another abreast of any withdrawals. If one forgets to let the other know that a withdrawal has been made, a cheque may be returned for insufficient funds.

 Some bankers can be inefficient about crediting funds to the correct account so an account might reflect a lower balance even though adequate funds have been credited by the beneficiary.

 If your debit card has been stolen and your PIN number compromised, a fraudster can make off with your funds.

 Another common occurrence is that someone owes you money and issues you with a dud cheque. If you have written cheques against that cheque, then your cheque will also bounce.

 Some people are just simply unscrupulous and know fully well that their account is not funded and they issue a cheque knowing that they do not have the money in the account.

 With the strict measures in place, it is expected that we will see a reduction in the issuance of dud cheques. CBN has directed all Commercial Banks to send details of their customers along with copies of their dud cheques to the CBN. Worse still, the CBN will in turn forward such details to the Economic and Financial Crimes Commission (EFCC) for further investigation.

 It is thus imperative that banking customers are diligent in ensuring that their accounts are funded before issuing a cheque to a 3rd party. It is also important to get into the practise of confirming cheques as this should ensure that a cheque is honoured. Are you in the habit of issuing dud cheques? If so, please stop it.

Nimi  Akinkugbe