The Central Bank of Nigeria (CBN) has directed banks not to impose fees on customers for reactivation of accounts that have been dormant for up to 10 years.
This comes as the apex bank directed them to transfer balances that have remained in the dormant account, estimated to be not less than N20 trillion to the Unclaimed Balances Trust Fund (‘UBTF) pool account.
UBTF Pool Account means the account designated in CBN for warehousing the unclaimed balances in eligible accounts.
The CBN last week issued the revised guidelines on the ‘Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions in Nigeria’, to banks and other financial institutions for implementation.
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As of the end of the first quarter of this year, there are 19.799 million dormant bank accounts, accounting for 6.81 percent of all bank accounts nationwide, data from the Nigeria Interbank Settlement System (NIBSS), indicated.
One of the reasons an account becomes dormant is inactivity. Customers might stop using their accounts due to personal reasons, such as relocating, changing banks, or simply not needing the account anymore.
Other reasons include, economic hardship, where financial difficulties can lead to reduced banking activity. People facing economic challenges may not have sufficient funds to keep their accounts active.
Some customers open multiple accounts for different purposes and may neglect some over time, especially if those accounts are not linked to automatic transactions.
According to the directives, the CBN will open and maintain a dedicated ‘UBTF Pool Account’ to manage these funds and will keep detailed records of beneficiaries associated with the unclaimed balances held in the UBTF Pool Account.
The funds will be invested in Nigerian Treasury Bills (NTBs) and other securities approved by the unclaimed balances management committee.
In a move to ensure transparency and prompt access to funds, the CBN has mandated that refunds of principal and any accrued interest be made to beneficiaries with 10 working days of receiving a request. If an extension is necessary, the CBN will notify the requesting financial institution, providing reasons for the delay.
According to the new guidelines, financial institutions will develop and implement policies for recognising and managing dormant accounts and financial assets.
The guidelines stated, “The formulation of these policies is essential to align with the latest guidelines and ensure that dormant accounts are managed effectively.”
In addition to policy formulation, financial institutions will establish robust controls to guarantee surveillance and a secondary level of authorisation for the reactivation of dormant accounts. “These controls are crucial to preventing unauthorised access and potential fraud,” said the CBN.
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Furthermore, financial institutions are required to maintain comprehensive records, including a detailed register of dormant account balances. “Maintaining these records is key to ensuring transparency and accountability,” the CBN added.
In a circular signed by John Onojah, acting director, financial policy and regulation department, the revised guidelines, which operationalises Section 72 of the Banks and Other Financial Institutions Act (BOFIA) 2020, followed engagement and consultations with relevant stakeholders, whose comments and recommendations were considered in the review process.
It, amongst others, standardised the management of dormant accounts, unclaimed balances and financial assets, and outlined the procedure for the administration of these balances, funds, and assets by banks and other financial institutions in Nigeria.
With over one-third of adults reporting low financial capability, and relatively low access to formal efficient mechanisms to meet financial needs, Nigeria report a 12 percent point drop in the proportion of adults who are financially healthy, according to Enhancing Financial Innovation & Access (EFInA).
