The Central Bank of Nigeria (CBN) has announced that it will commence penalizing Deposit Money Banks (DMBs) whose equipment distorts images and data during the cheque truncation process, effective November 1st, 2023.
This move is in response to the growing concerns about Magnetic Ink Character Recognition (MICR) failures within the banking sector.
CBN issued a circular titled “Circular on the revised Nigeria Cheque Standards (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS): Magnetic Ink Character Recognition (MICR) reject,” advising DMBs to ensure their in-house cheque processing equipment is properly calibrated and supervised.
The directive aims to eliminate the distortion of images and data during the cheque truncation process.
The circular, signed by Mr. Sam Okojere, the Director of Banking Services Department at CBN, emphasized the need for DMBs to contact their personalizers to validate MICR codeline details for correctness in accordance with the NCS and NICPAS version 2.0, which was issued on September 18, 2018.
The CBN’s decision to penalize banks for MICR rejects is part of its broader effort to reduce the number of such failures and improve the overall efficiency and security of the Nigeria Clearing System.
DMBs are urged to comply with the directive, as the CBN will closely monitor and enforce it. Any bank experiencing MICR rejects from November 1st, 2023, will face penalties in accordance with the established Sanctions Grid.
This move underscores the CBN’s commitment to maintaining the integrity and effectiveness of the nation’s financial systems, ensuring that cheque processing remains reliable and secure for all stakeholders.