The Bank of Ghana (BoG) has tightened sanctions against customers who issue dud cheques, with repeat offenders facing penalties of up to 20 per cent of the face value of the cheque, alongside restrictions on their ability to issue cheques and access new credit facilities.
Under the revised sanctions, a customer who issues a dud cheque for the third time within one year of the first offence will be required to pay a levy equivalent to 20 per cent of the face value of the cheque.
The customer will also be banned from issuing cheques for at least three years and restricted from accessing new credit facilities from the banking system for one year.
The Bank of Ghana will further notify all banks and Specialised Deposit-Taking Institutions (SDIs) of the ban.
The measures form part of the central bank’s revised financial literacy notice on dud cheques, aimed at reminding customers of the financial and legal consequences of issuing cheques without sufficient funds to honour them.
A dud cheque occurs when a customer draws a cheque on an account that does not have sufficient funds to cover the amount specified on the cheque.
When such a cheque is presented, the bank rejects it and returns it unpaid, with the account holder liable to penalties under Bank of Ghana regulations and potentially further legal consequences.
Escalating penalties
The sanctions increase progressively depending on the frequency of the offence. For a first offence, the customer’s bank is required to impose a penalty equivalent to 10 per cent of the face value of the cheque.
The bank must also issue a warning notification outlining the consequences of repeating the offence. The first offence is reported to both the Credit Reference Bureaus (CRBs) and the Bank of Ghana.
For a second offence within one year of the first, the penalty rises to 15 per cent of the face value of the cheque. The bank is again required to issue a warning and report the offence to the CRBs and the Bank of Ghana.
However, a third offence within the stipulated one-year period triggers the most severe sanctions, including the 20 per cent levy, a minimum three-year ban on issuing cheques and a one-year restriction on accessing new credit facilities.
Creditworthiness at risk
The Bank of Ghana cautioned that the consequences of issuing dud cheques could extend beyond the immediate financial penalty. It said an adverse report to the credit reference bureaus could tarnish a customer’s creditworthiness and make access to credit more difficult and expensive in the future.
The central bank identified possible consequences including a poor credit score, higher borrowing costs and limited access to funds.
The reporting of dud-cheque offences to credit reference bureaus means that customers who repeatedly issue such cheques could face longer-term implications when seeking credit from financial institutions.
Cheque books to be recalled
The revised measures also require banks to take further action once they receive notification of a customer’s cheque-issuing ban.
The customer’s bank must notify the affected person of the ban within five working days, recall all unused cheque books and refrain from issuing new cheque books until the sanctions are lifted.
The Bank of Ghana has also warned customers against failing to return unused cheque books after being notified of a ban.
If unused cheque books are not returned within 10 working days of notification, the bank is required to report the matter to the Bank of Ghana.
The central bank may subsequently ban the customer from operating any current account, while the person’s name may be added to the Bank of Ghana’s Directory of High-Risk Cheque Issuers. The central bank has urged customers to take steps to ensure that cheques issued are backed by sufficient funds.
It advised customers to know their account balances before issuing cheques and to take into consideration pending transactions or payments that could reduce the available balance.
Customers have also been cautioned against issuing cheques based on funds they merely expect to receive later, unless they are certain the funds will be available in time.
The Bank further advised customers to keep track of cheques they have issued and their expected presentation dates, maintain sufficient funds to cover them and contact their banks promptly if they realise they may not have enough money in their accounts.
The Bank of Ghana said the measures are intended to underscore the financial and legal consequences associated with issuing dud cheques and encourage responsible use of cheque facilities.
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