In a bid to enhance the efficiency of the Nigeria Clearing System and minimize cheque rejections arising from Magnetic Ink Character Recognition code (MICR) issues, the central Bank of Nigeria (CBN) has issued a directive to banks.
This directive, outlined in a circular dated October 9, 2023, but made public on Tuesday, emphasizes the growing concern of increasing MICR rejects and its impact on the clearing system.
MICR rejects refer to cheques that are declined by the clearing system due to inaccuracies in the MICR code line.
The MICR code line is a sequence of numbers and symbols located at the bottom of a cheque, which is crucial for identifying the bank, branch, and account number associated with the cheque.
Addressing this issue, the CBN has instructed banks to liaise with their personalizers and stress the importance of validating the MICR code line details for accuracy.
This directive aligns with the Nigerian Cheque Standards (NCS) and the Nigeria Cheque Printers Accreditation Scheme (NICPAS) version 2.0, which was released on September 18, 2018.
The CBN highlighted the significance of this directive in reducing the growing instances of MICR rejects, stating, “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.”
The circular specifies that “Deposit Money Banks (DMBs) are hereby directed to contact their personalizers and reiterate the need to revalidate the MICR codeline details for correctness in accordance with the NCS and NICPAS version 2.0.”
Both the banks presenting the cheques and those receiving them are advised to meticulously examine their in-house cheque processing equipment to ensure they are correctly calibrated and supervised.
This is to prevent any distortion of images and data during the cheque truncation process.
The CBN has initiated close monitoring of banks’ compliance with these directives, and non-compliance will result in penalties, in accordance with the prescribed sanctions grid.
The deadline for adherence to these measures is set for November 1, 2023.