Dishonoured Cheques (Repeal & Re-enactment) Bill

What Is This Policy?

The Dishonoured Cheques (Repeal & Re-enactment) Bill 2023 is Nigeria's legislative response to modernise and strengthen the legal framework governing cheque fraud. It repeals the outdated Dishonoured Cheques (Offences) Act 1977 and replaces it with a more comprehensive statute that criminalises the deliberate issuance of dishonoured cheques, expands the grounds for liability, raises financial penalties to reflect current economic realities, and widens court jurisdiction to improve access to justice for victims across all states of the Federation.

Who Does It Target?

Individuals and natural persons who issue cheques in Nigeria as payment for goods, services, or settlement of lawful obligations Body corporates including small companies (annual turnover under ₦20,000,000) and large companies that issue cheques in commercial transactions Directors, managers, secretaries, officers, and agents of corporate bodies through whose consent, connivance, or neglect dishonoured cheque offences are committed Banks and other financial institutions licensed by the Central Bank of Nigeria (CBN), who as drawees bear obligations to serve notice of dishonour to drawers Payees, individuals and entities who receive cheques and are victims of dishonour fraud Prosecutors, courts, and the Attorney General of the Federation in exercise of concurrent criminal jurisdiction across federal and state levels

What Does It Aim to Achieve?

Modernise the 1977 Act to reflect Nigeria's contemporary commercial and banking environment Criminalise all deliberate acts or omissions by cheque drawers that obstruct payment, beyond the original scope of insufficient funds alone Replace mandatory imprisonment with a flexible sentencing regime offering fines as an alternative to custodial sentences reducing strain on the criminal justice system Impose proportionate financial penalties on corporate offenders, calibrated to company size, replacing the outdated flat-rate sanctions Extend the limitation period for presenting a cheque from three months to six months, reducing the incidence of time-bar injustice for payees Empower State High Courts and Magistrate Courts to try dishonoured cheque offences, bringing justice closer to the people Establish a formal Notice of Dishonour mechanism requiring banks to promptly notify drawers and payees, enabling pre-litigation resolution Enable courts to order full restitution of cheque value and property to victims, alongside criminal penalties

Key Features

Expanded Grounds for Offence: The Bill criminalises dishonour on six grounds: (1) no funds or insufficient funds (2) dormant or non-existent account (3) cheque value exceeds authorised limit (4) countermand or stop payment without payee notice (5) irregular mandate (6) any other deliberate act or omission by the drawer to obstruct payment. Revised Penalties: Individuals face up to two years' imprisonment, a fine of ₦500,000, or both. Small companies (turnover ≤ ₦20 million) face fines of ₦1,000,000. Large companies face fines of ₦5,000,000. These penalties replace the outdated 1977 sanctions. Six-Month Presentation Period: A cheque must be presented for payment within six months of its date extended from the three-month period in the 1977 Act to establish the offence of dishonour. Restitution Orders: Courts may, in addition to criminal penalties, order the repayment of the cheque value, restitution of property obtained, or compensation for the value of services obtained through the dishonoured cheque. Corporate Officer Liability: Directors, managers, secretaries, and agents of corporate bodies are personally liable where the offence is committed with their consent, connivance, or through their neglect making individuals within corporations personally accountable. Widened Court Jurisdiction: The Federal High Court, FCT High Court, State High Courts, and State Magistrate Courts all have jurisdiction to try offences significantly decentralising and democratising access to justice for victims. Formal Notice of Dishonour: Banks (drawees) are legally required to issue a Notice of Dishonour to the drawer within four days of dishonour, giving the drawer seven days from receipt to redeem the cheque. Banks failing to comply face a fine of ₦500,000. Good Faith Defence: A drawer who can prove to the court that, at the time of issuing the cheque, they had reasonable grounds to believe it would be honoured is not guilty of an offence under the Bill.

Current Status

1st Reading: Thursday, 20 July 2023 2nd Reading: Wednesday, 22 November 2023 Committee Referral: Referred to relevant Senate Committee following 2nd Reading debate 3rd Reading: Pending as of July 2024 Bills Progression Chart Presidential Assent: Pending How It Affects Key Stakeholders Cheque Issuers (Individuals): Ensure adequate funds in your account before issuing cheques. The Bill creates criminal liability for all deliberate acts obstructing payment not just insufficient funds. The presentation window is six months. Cheque Issuers (Corporates): Large companies face fines of up to ₦5,000,000. Officers and directors can be personally prosecuted. Robust internal controls on cheque issuance are essential. Payees and Creditors: If a cheque is dishonoured, you are entitled to a certified Notice of Dishonour within four days from the bank. The drawer has seven days to redeem. Criminal prosecution and civil restitution are available remedies. Banks and Financial Institutions: Mandatory obligation to issue formal Notice of Dishonour to both drawer and payee within four days of dishonour; failure attracts a ₦500,000 fine. Courts and Prosecutors: State High Courts and Magistrate Courts now have jurisdiction, enabling decentralised, accessible prosecution of cheque fraud. The Attorney General of the Federation retains concurrent prosecutorial authority.

Important Terms

Cheque: A written order to a bank to pay a specified sum from an individual's or corporate person's account; a negotiable and payment instrument. Dishonoured Cheque: A cheque not honoured by a bank on any of the six grounds specified in the Bill. Drawer: The person whose name and signature (or authorised signatory) appears on the cheque. Drawee: The bank or financial institution holding the drawer's account and ordered to pay. Payee: The person to whom the cheque or the money therein is payable. Small Company: A company categorised as such under the Companies and Allied Matters Act (CAMA); annual turnover threshold of ₦20,000,000. Cheque Value: The monetary amount clearly written or expressed on the face of the cheque. Notice of Dishonour: A formal notice served by the bank (drawee) on the drawer within four days of dishonour, specifying the reason and requiring redemption within seven days.

Impact & Metrics

Modernisation of a 47-year-old law: The 1977 Act has been overtaken by inflation, changes in corporate law (CAMA), and the growth of formal banking the Bill brings Nigeria's cheque law into the 21st century. Inflation-adjusted penalties: The original 1977 fines were nominal in value; the new sanctions (up to ₦5 million for large corporates) are calibrated to present-day commercial realities and serve as genuine deterrents. Access to justice: Extending jurisdiction to State High Courts and Magistrate Courts dramatically reduces cost, time, and geographic barriers for victims of cheque fraud across Nigeria. Commercial confidence: By strengthening the enforceability of cheque-based transactions, the Bill supports the integrity of Nigeria's payment ecosystem and promotes trust in commercial dealings. Balance of rights: The good faith defence and the formal Notice of Dishonour mechanism protect honest drawers from punitive prosecution while holding bad-faith actors accountable.

Official Resources

National Assembly of Nigeria: nass.gov.ng Bill Document: Dishonoured Cheques (Offences) Bill, 2023 — available via nass.gov.ng/documents/billdownload/11139.pdf Contact: Senate Bills Department, National Assembly Complex, Three Arms Zone, Abuja, FCT Summary prepared using the Policy Summary Template | Source: Dishonoured Cheques (Offences) Bill SB. 10, 10th National Assembly; Dishonoured Cheques (Offences) Act 1977 Cap. D11; allAfrica.com | March 2026

Legal Framework

The Dishonoured Cheques (Repeal & Re-enactment) Bill 2023 would, when enacted, replace the Dishonoured Cheques (Offences) Act 1977. It would operate under the Bills of Exchange Act, the Banks and Other Financial Institutions Act 2020, and the Cybercrimes Act 2015 (on electronic payment fraud). The CBN Cheque Standards Regulations and the Nigeria Inter-Bank Settlement System (NIBSS) electronic payments framework provide the operational context.