The Central Bank of Nigeria (CBN) recently released the exposure draft of guidelines on the management of dormant accounts, unclaimed balances and other financial assets in banks and other financial institutions In Nigeria.
It proposed that banks should transfer funds in accounts that have been dormant for up to 10 years into a trust fund account.
Eligible accounts, according to the CBN, are dormant accounts balances that have remained with the financial institutions for a period of 10 years and beyond.
Chibuzo Efobi, director, financial policy and regulation department of the CBN, said this in a circular accompanying the exposure draft to all banks and other financial institutions, released on Thursday last week.
Commenting on the proposal, a top banker told BusinessDay: “There is a way banks can go about it; they can put money in an account that has not been operated for three years and say it is now active.
“If the banks agree with the CBN and the Bankers Committee, they may move the funds as directed but if the banks do not agree, they can go to court and say these are customers’ money and they can come for it anyday or any time.”
According to the banker, the money in dormant accounts could run into hundreds of millions of naira for small banks and billions for the big banks.
“That is why people are revolting and banks are a little bit reluctant to do that. Some of the dormant accounts are for dead people. They died; they didn’t tell their wife and children,” he said.
Uju Ogubunka, president of Bank Customers Association of Nigeria (BCAN), is of the view that the monies in dormant accounts are not idle.
“There is nothing like dormant money. Money flows in and out of the bank. You do not disenfranchise people of their money. The preliminary thing the CBN should do is to set up a committee to find out who the owners of the dormant accounts are, if they are alive,” he said, adding that dormant accounts would be prevalent in the first-generation banks.
How CBN plans to treat dormant accounts and unclaimed funds
The CBN said it shall open and maintain a trust fund called ‘Unclaimed Balances Trust Fundl (UBTF) pool account’.
It said it would maintain records of the beneficiaries of the unclaimed balances warehoused in the UBTF pool account.
The CBN said it would invest the funds in Nigerian treasury bills and other securities as may be approved by the ‘Unclaimed Balances Management Committee’, and refund the unclaimed funds to the beneficiaries not later than 10 working days from the date of receipt of the request.
Where it is imperative to extend the timeline, the CBN said a notice of extension shall be communicated to the requesting financial institution stating reasons for the extension.
On the implication of dormant accounts, a report by Chaman Law Firm Team said: “When an account is deemed as “dormant”, all customers’ debit and credit transactions will be blocked including restrictions on ATM, internet-banking and phone-banking transactions. Some banks extend these restrictions to cheque transactions as well. In short, it renders the account useless.”
Eligible dormant accounts/unclaimed balances and other financial assets
Eligible dormant accounts/unclaimed balances and other financial assets include: current, savings and term deposits in local currency, domiciliary accounts, deposits towards the purchase of shares and mutual investments, prepaid card accounts and wallets, proceeds of uncleared and unpresented financial instruments belonging to customers or non-customers of financial institutions and unclaimed salaries and wages, commissions, and bonuses.
Others are proceeds of stale local and/or foreign currency drafts not presented for payment by beneficiaries, funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account had not been debited, a judgment debt for which the judgment creditor has not claimed the amount of judgment award, and any other deposits or financial assets that may be designated by CBN.
Exempted dormant accounts
Dormant accounts/financial assets that are exempted include government-owned accounts, accounts that are subject of litigation, accounts under investigation by a regulatory authority or law enforcement agency; and encumbered accounts including, but not limited to, collaterals and liens.
Re-activation of dormant account
Financial institutions shall require the account owner to complete a reactivation form in person, verify the information provided on the reactivation form, not charge any fee for reactivation of dormant account, reactivate the dormant account with the approval of two authorized officers with one being at least the branch operations manager, reactivate dormant accounts within a maximum of two working days, and notify the account owner, free of charge, upon reactivation of the account.
