Before CBN Empties Dormant Account Balances, Unclaimed Funds In Banks

The Central Bank of Nigeria (CBN) recently announced draft guidelines that would require commercial banks and other financial institutions (OFIs) to transfer funds in their customers’ accounts that have been dormant for up to 10 years into a trust fund account. This, it said, is geared towards mopping up funds in dormant and unclaimed accounts of customers in various banks in the country which have now become targets of fraudsters.

The apex bank intends to open and maintain an Unclaimed Balances Trust Fund (UBTF) Pool Account earmarked for the purpose of warehousing unclaimed balances in eligible accounts. The pooled amount will then be invested in government securities like Treasury Bills and other interest-yielding ventures to be returned to the owners not later than ten days of notice. The accruing profits will also be credited to the beneficiaries of the accounts upon reactivation.

This was contained in a circular issued by CBN’s Director of Financial Policy and Regulation Department of the apex bank, Chibuzor Efobi, which said the objective of the new guidelines is to “Identify dormant accounts/unclaimed balances and financial assets with a view to reuniting them with their beneficial owners; hold the funds in trust for the beneficial owners; standardize the management of dormant accounts/unclaimed balances and financial assets; and establish a standard procedure for reclaim of warehoused funds.”

The affected accounts and financial assets will 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 un-presented financial instruments belonging to customers or non-customers of FIs; 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 has not been debited and a judgment debt for which the judgment creditor has not claimed the amount of judgment award.

Naija News wonders if this is not the case of the federal government is trying to achieve by subtlety where it failed after revealing its intention in January 2021 to borrow N895 billion from dormant bank account balances and unclaimed dividends. This proposal at the time generated widespread criticisms from Nigerians and industry players, even as the Socio-Economic Rights and Accountability Project (SERAP) instituted legal action against the Federal Government over the matter.

The rights group, in a suit before an Abuja Federal High Court, sought “an order of perpetual injunction restraining and stopping President Muhammadu Buhari from demanding, taking over, borrowing, and collecting Nigerians’ money in the form of their unclaimed dividends and funds in dormant accounts, or transferring and moving the money into a trust fund known as Unclaimed Funds Trust Fund.”

Nigerians have reason to worry that the CBN may just be out to take over the management of dormant funds with the sole intent of lending them to the federal government which debt portfolio is already at N46.25 trillion. If this is true and considering how cash-trapped the government currently is, how then can the central bank be trusted to return the idle funds or return on investments to their owners upon the proposed 10-day notice? Nigerians won’t forget the inconsistencies coupled with the confusion and distress the apex bank caused them during the window for bank customers to return old N500 and N1000 notes to its branches.

Be that as it may, the World Bank was in the news earlier this week as disclosing that Nigeria’s constant fiscal deficit has worsened to the extent that 96 per cent of the country’s revenue was spent on debt servicing in 2022. Why then should the federal government be further exposed to debt stock through the CBN? What guarantee is there that such a heavily-indebted government will readily pay back funds mopped up from dormant accounts to the account holders or their next of kin?

Granted that Section 72 (11) of the Banks and Other Financial Institutions Act 2020 (BOFIA) empowers the apex bank to issue guidelines for the administration of unclaimed funds in banks, specialized banks and OFIs in the country, that doesn’t mean that the central bank should forcefully confiscate people’s money in financial institutions. The policy which forced bank customers to link their bank verification numbers (BVN) or national identification numbers (NIN) with their accounts must have increased the quantum of monies lying fallow in the banks. This doesn’t mean that the owners don’t exist or do not need the funds.

There are also cases where an account becomes dormant following the demise of the holders. Such deceased persons have next-of-kin which we expect deposit money banks and the CBN to reach out to before salivating over where to divert such funds. Pray, what’s the point of requesting prospects to provide the details of their next-of-kin while opening a bank account when such beneficiaries will be left in the lurch when their loved one dies? Even when they make efforts to claim the estate, the process is so tedious that the cost sometimes trumps the money that the next-of-kins are trying to claim.

If the central bank is really interested in addressing the issue of dormant accounts and idle funds, it should impress on financial institutions to regularly check up on holders of accounts that are dormant and if unavailable promptly contact their next-of-kin. That is not too much to ask of the banks for their customers. The banking public will however be well advised to always let their loved ones know how to access their bank deposits. Those trusted to be designated as next of kin should also be trusted enough to know the PIN of ATM cards.

While the economy is still reeling from the Naira re-design debacle and citizens the debilitating cash crunch that ensued, the CBN had better be careful with going on with a project that erodes whatever is left of the confidence Nigerians have in the banking system. People will further choose to stash their money elsewhere at the faintest fear or misgiving that their bank deposits will be mopped up by the government if their accounts are assumed to be dormant. Since the policy is at the draft stage, Naija News calls on stakeholders to make critical contributions even as we expect the apex bank to factor in their feedback towards an effective guideline on the management of dormant accounts, unclaimed balances and other financial assets in banks and other financial institutions in Nigeria.

Happy Eid-Mubarak to our readers.