We’ll ban customers who issue dud cheques – BoG gets tough

The Bank of Ghana (BoG) has introduced stiffer punishment for customers of financial institutions who issue dud cheques.

The apex bank is concerned about the rising cases of dud cheques despite the practice classified as a criminal offence.

Under section 313(A) of the Criminal Offences Act, 1960 (Act 29) as amended, it is an offence punishable by a fine and/or imprisonment of up to five (5) years for any person to issue a dud cheque.

A new regime announced in a press statement on Friday, March 12, 2021, outlined additional sanctions including a ban.

To clamp down on the practice, the central bank has introduced the following additional punishments with immediate effect.

1. A bank or Specialised Deposit-Taking Institutions (SDIs) shall issue a Warning Notification to a customer who issues a dud cheque for the first time and report the offence to the credit reference bureaux. The bank shall place the customer under surveillance for a minimum period of three (3) years. The warning should be documented and may be in the form of a Short Message Service (SMS), an email or any other established means of communication between the bank or SDI and that customer. The notification shall also indicate further sanctions that will be applied in the event of subsequent breaches.

 

2. Where a customer issues a dud cheque for the second time within three (3) years of the first offence, the drawee bank or SDI concerned, in addition to the above sanctions under paragraph 1, shall report the conduct of the customer to the BoG and the customer’s details and breach shall be recorded in a dud cheque register maintained at the BoG.

 

3. Where a customer issues a dud cheque on a third occasion within three years of the first offence, the drawee bank or SDI concerned, in addition to the above sanctions under paragraph 1 and 2, shall again inform the BoG. The BoG shall ban such a customer from issuing cheques within the country for a minimum period of three (3) years. The BoG shall notify all banks and SDIs of the ban and publish a list of all third offenders in two daily newspapers of national circulation. The customer may, however, be permitted to receive cheques and funds into the affected account and perform other electronic transactions on the account. Additionally, BoG, shall ban such a customer from accessing new credit facilities from the banking system for a period of three (3) years.

What are dud cheques?

Dud cheques are cheques that are drawn on bank accounts that have insufficient funds to meet their face values.

The Credit Reporting Act, 2007 (Act 726) makes it compulsory for banks and other deposit-taking institutions to report such incidents to credit reference bureaus in the country.

Issuance of dud cheques hit a four-year high in 2016, rising from 34,389 in 2014 to 55,665. It, however, dropped to 29,334 in 2017.

In 2018, the apex bank banned 125 people from opening and operating current accounts with any bank in the country for three years after persistent issuance of dud cheques.

Additional directives

The apex bank entreated SDIs to submit data on issuers of dud cheques to the credit reference bureaux in accordance with Section 25 (c) of the Credit Reporting Act, 2007 (Act 726).

Additionally, BoG said banks and SDIs shall continue to submit returns on dud cheques using prescribed format.

“Failure by a bank or SDI to submit returns shall attract sanctions in accordance with Section 93 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930)”.

The central bank directed all banks to display copies of the latest notice in all their halls and on official websites.

“A bank or SDI which fails to comply with these directives shall be sanctioned in accordance with section 92(8) of the Banks and Specialised Deposit-Taking Institutions Act 2016, (Act 930),” the release concluded.