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By Uzodinma Onyewuchi
Over the years, there have been concerns among the banking public about humongous sums trapped in the vaults of deposit money Banks (DMBs) in accounts believed to be dormant. That is to say accounts not operated by their holders. To redress this situation, the Central Bank of Nigeria (CBN) now allows dormant accounts to be reactivated via secure channels without affidavits, unless the funds were moved to Unclaimed Balances Trust Fund.
The new requirements are “intended to enhance transparency, facilitate reunification of funds with their rightful owners, and ensure full compliance with applicable legal and regulatory frameworks.” To this extent, therefore, banks are mandatorily expected to publish details of dormant accounts on their websites and in newspapers.
These guidelines on management of dormant accounts, unclaimed balances, and other financial assets in banks and other financial institutions in Nigeria are designed to protect depositor interests, prevent fraudulent activities, and establish a uniform process for managing dormant accounts and unclaimed balances.
They apply to all financial institutions regulated by the CBN, including commercial banks, merchant banks, non-interest banks, and other deposit-taking institutions.
By the provisions of these guidelines, dormant accounts that have been inactive for over 10 years are deemed dormant. To claim unclaimed balances account holders must provide documentation proving account ownership, valid identification, proof of current residence, and an affidavit confirming the accuracy of the information. On their own part, financial institutions are required to verify these claims and submit them along with supporting documents to the CBN within ten (10) working days. The CBN processes these claims and refunds the principal and any accrued interest within another ten working days.
However, exemptions are accounts under litigation, investigation, or used as collateral. The apex bank stipulated some key stakeholders and their responsibilities under the guidelines: Some of these include the Central Bank of Nigeria itself which is responsible for establishing and managing the unclaimed balances trust fund (UBTF) pool account, as well as ensure compliance with the guidelines; financial Institutions are required to monitor inactive accounts, inform customers, secure dormant accounts, and transfer funds from these accounts to the UBTF Pool Account after 10 years.
And Nigeria Deposit Insurance Corporation (NDIC), which manages accounts on behalf of financial institutions in liquidation. The guidelines also put in place account management procedures and dispute resolution mechanisms which include reactivation of dormant as accounts holders must complete a reactivation form, provide valid identification, and proof of current residence along with a verifying affidavit. The financial institutions are expected to complete this process within three working days, without any charges.
By the provisions of these guidelines, disputes between account holders and financial institutions are regulated by the CBN Consumer Protection Regulation modalities. But if disputes remain unresolved within 15 days, or if the account holder is dissatisfied with the resolution, the issue may be escalated to the CBN’s consumer protection department for further review.
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There are inherent implications for stakeholders some of which require that financial institutions must notify account holders six months before classifying an account as dormant if it has been inactive for one year.
They are also required to develop and implement policies for managing dormant accounts, maintain accurate records, and ensure funds from dormant accounts are transferred to the UBTF Pool Account after a ten-year period.
On their part, account holders are likely to benefit from clear and secure procedures for managing and recovering funds from dormant accounts and unclaimed balances. Following the implementation of these guidelines, some banks have published details of no fewer than 321,181 dormant accounts.
This comes as economic analysts have warned that the CBN directive raises major concerns around customer communication, account reactivation procedures, business failures, and privacy. It is reported that the published dormant accounts span individuals, companies, cooperatives, churches, clubs, community associations, and small businesses that have remained inactive for over 10 years. The combined figure from the banks stood at about 321,181 dormant accounts.
The accounts reflected widespread inactivity among SMEs, oil and gas firms, logistics operators, churches, schools, hospitality businesses, pharmaceutical firms, marine operators, and informal trading businesses.
The apex bank further explained that the disclosure requirements are consistent with the provisions of the Nigeria Data Protection Act, 2023, which permits the processing of personal data when necessary for compliance with a legal obligation or the protection of individuals’ vital interests.
• Onyewuchi writes from Abuja
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