The Central Bank of Nigeria (CBN) has set a five-year timeline for banks to keep physical cheque presented to them by customers after which the instrument may be disposed.

This is contained in the Nigerian Bankers’ Clearing System (NBCS) Rules released Wednesday by the apex bank. The policy is in line with the CBN’s exercise  of  the  powers  conferred  on  it under Sections  2(d),  33  (1)(b)  and  47(2)  of  the  CBN  Act  2007  — to  promote a sound  financial system,  issue  guidelines,  facilitate  the  development  of  an  efficient  and effective  payments  system.

The  NBCS Rules,  which took effect immediately, said any licensed bank that is not a member of the NBCS may enter into an agency agreement  with  any  member – bank  for  the  purpose  of  accepting cheques and other instruments drawn on it and for collecting cheques drawn on other banks.

A  member  bank  may  be  penalised  by  suspension  from  participating  in  clearing for such periods as shall be determined by the CBN for non-attendance of two consecutive meetings of the Committee, without a satisfactory reason communicated in writing within five working days before or after any scheduled meeting.

Eligible financial instruments for clearing purposes are paper-based payment instruments, such as cheques, managers  cheques, drafts , dividend/interest warrants, debit/credit notes, bankers  payments.

Paper-based Payment Instruments deposited by the customer at any member bank shall be deemed paid by 10pm of the next working day (T+1) except where it is returned by the paying bank, a special caution or an extension of value date request has been received from the paying bank.

A  settlement  bank  shall  maintain  strict  confidentiality  in  respect  of  any confidential  information  made available  to  it pursuant  to their  settlement  agency agreement and may not disclose same except with the express permission of the Non-Settlement Bank or as may be lawfully required.

Also, Settlement Bank shall not use any information provided by Non-Settlement Bank  for  any  purpose  other than  as  permitted  or  required under  the  Agency Agreement.