CBN to impose sanctions on Nigerian banks for rejecting MICR Line in cheque transactions
By Sodiq Adelakun
Starting from November 1, 2023, banks in Nigeria will face sanctions from the Central Bank of Nigeria (CBN) if they reject the ‘Magnetic Ink Character Recognition line’ (MICR Line) in cheque transactions.
This announcement was made by the CBN in a circular titled ‘The Revised Nigeria Cheque Standards (NCS) and Cheque Printers Accreditation Scheme (NICPAS): MICR Reject.’The MICR Line is a series of numbers printed on a cheque using magnetic ink.
It included information such as the bank routing number, account number, cheque number, and cheque amount.
The purpose of the MICR Line is to enhance the efficiency and security of the Nigeria Clearing System.
Also, the CBN has instructed banks to contact their personalisers to verify the correctness of the MICR code-line details in accordance with the NCS and NICPAS version 2.0.
The introduction of sanctions for MICR reject is aimed at improving the efficiency and reliability of cheque transactions in Nigeria.
This move by the CBN is part of its ongoing efforts to modernise and streamline the banking sector in Nigeria. By implementing stricter standards and regulations, the CBN aims to create a more secure and efficient financial system that meets international standards.
Banks in Nigeria will need to ensure that they comply with the revised Nigeria Cheque Standards and Cheque Printers Accreditation Scheme to avoid facing penalties from the CBN.
This development is expected to encourage banks to improve their cheque processing systems and provide a more reliable service to their customers.Overall, the CBN’s decision to sanction banks over MICR reject demonstrates its commitment to enhancing the efficiency and security of cheque transactions in Nigeria.
Part of the circular reads, “It has come to our notice that MICR rejects have been on the increase and in furtherance of the Bank’s effort to reduce the number, Deposit Money Bank (DMBs) are hereby directed to contact their personalizers and reiterate the need to revalidate the MICR code-line details for correctness in accordance with the NCS and NICPAS version 2.0.
“Furthermore, both the presenting and receiving banks should also thoroughly examine their in-house cheque processing equipment to ensure that they are properly calibrated and supervised to eliminate distortion of image and data being transmitted during the cheque truncation process.
“Please note that the bank will monitor compliance with the provision of this circular and any bank with MICR reject starting from November 1, 2023 would be penalized in accordance with the Sanctions Grid.”
In January 2021, the CBN announced that NICPAS version 2.0 would commence April 1, 2021 and the NCS/NICPAS 2.0 sanction grid will be operational on the same date.
The new date was an extension from the earlier deadline of January 1, 2021. The extension of the deadline was due to the outbreak of Covid-19 pandemic and the impact it had on the NCS and NICPAS version 2.0 project.
In August 2023, the banking and finance sector regulator updated the list of its accredited cheque printers and personalizers for efficient payment and settlement.
Consequently, the accredited six printers include Superflux International Limited, Triple Gee and Company plc, Yaliam Press Limited, Marvelous Mike Press Limited, Kas Arts Services Limited and Papi Printing Company Limited.
According to the CBN, the personalizers are Zenith Bank Plc, Eco Bank Plc, Stanbic IBTC Bank, First Bank Nigeria, Keystone Bank Limited, Wema Bank Plc and Providus Bank Limited.
