The Central Bank of Nigeria has lifted the temporary suspension placed on cheque clearing in the country with effect from Tuesday, April 28, 2020. This was disclosed in a circular issued by the apex Bank and seen by Nairametrics.
In the circular, which was signed by the Director, Banking Services Department, Sam Okojere, the apex bank explained that in furtherance of its effort in the development of a safe and efficient payment system in the country, it has lifted the suspension.
In collaboration with relevant stakeholders, it added that “there was a need for cheque clearing to accommodate users of cheque as one of the payment instruments in Nigeria, despite the lockdown of some states and the Federal Capital Territory (FCT).”
It stated, “In view of the development, the bank hereby lift the temporary suspension of cheque clearing in Nigeria. Consequently, cheque instruments will be allowed to pass through the clearing system, with effect April 28, 2020.”
Meanwhile, Nairametrics reported when CBN suspended the clearing of all cheque instruments in the Nigerian Clearing System, starting from today March 31st, 2020.
According to the bank, the directive was intended to “ensure hitch-free clearing and settlement activities” during the previous 14-day lockdown.
Still relevant: Nairametrics understand a lot of corporate organizations may have piled pressure on the CBN to lift the suspension it placed as most corporates still rely on cheque payments to pay most of their bills. Corporates still issue cheque to pay suppliers, utility bills, services and other essential payment due most of which may have resulted in massive defaults if the suspension remained.
We also understand the CBN’s suspension was based on the earlier envisaged two-weeks lockdown which has now extended to about 5 weeks. Thus, the impact of not facilitating payments was taking its toll on corporate Nigeria and also threatening an already dire economy short of cash.
Despite a drop in the adoption of cheques a prefered means of payment for most corporates, it still accounts for a monthly average of N373 billion or N4.4 trillion in transaction value annually. The average monthly volume of cheque transactions was about 651k in 2019.
What this means: With this new directive cheque payments are not allowed and companies can now start to issue cheques. Banks will, therefore, commence clearing of cheques via the designated clearinghouses. We also expect the staff of banks involved in the clearing of cheques to be allowed to return to work. Signatories of corporates who are currently working from home, will also have to allow employees access to their homes or preferred locations to sign cheques.