Banks face sanctions for faulty cheque processing from November – CBN

Banks have been alerted by the Central Bank of Nigeria (CBN) that they will incur penalties for faulty check processing from November 1, 2023. The CBN made this announcement in a circular to all deposit money banks (DMBs) on Tuesday, October 18, 2023.

The circular, which was signed by the Director of Banking Services Department, Sam Okojere, revealed that the CBN had observed a rise in the number of Magnetic Ink Character Recognition (MICR) rejects in banks. MICR is a technology that uses magnetic ink to encode information on checks, such as the bank routing number, account number, check number, and amount.

The CBN said it had issued the Revised Nigeria Cheque Standards (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) version 2.0 on September 18, 2018 to improve the efficiency and security of the Nigeria Clearing System. However, some banks had not adhered to the standards and had corrupted the images and data transmitted during the check truncation process.

The CBN instructed the banks to contact their check personalizers and verify the MICR code-line details for accuracy in line with the NCS and NICPAS version 2.0. It also recommended that the banks inspect their in-house check processing equipment to ensure that it is properly calibrated and supervised.

The circular cautioned that any bank with MICR rejection starting from November 1, 2023, would be sanctioned in line with the Sanctions Grid. The Sanctions Grid is a document that specifies the penalties for various infractions in the banking sector.

The CBN said it would monitor compliance with the provisions of the circular and urged the banks to be guided accordingly. It also appealed to the public to report any cases of check rejection or delay to the CBN or any other relevant authority.