CBN has introduced new guidelines for managing dormant accounts and unclaimed balances, requiring transfers to the apex bank after 10 years.
On Friday, the Central Bank of Nigeria (CBN) unveiled new revised guidelines on managing dormant accounts, unclaimed balances, and other financial assets in banks and Other Financial Institutions (OFIs). The new framework mandates that financial institutions ensure that accounts that have remained dormant for 10 years and above are transferred to the custody of the apex bank.
This comes as the CBN Governor, Mr. Olayemi Cardoso, on Friday, in Abuja, rolled out indices, signaling improved growth and stability of the Nation’s economy, and assured Nigerians of better days ahead. Also on Friday, the CBN disclosed that it sold $106.50 million to 29 Authorised Dealer Banks (ADBs) between July 18 and 19, 2024, as part of efforts to improve supply in the foreign exchange (FX) market.
The CBN disclosed the revised guidelines on the management of dormant accounts in a circular dated July 19, 2024, which was signed by the Director, of the Financial Policy and Regulations Department, Mr. John Onoja, and addressed to all banks and OFIs.
According to the central bank, the guidelines seek to standardize the management of dormant accounts, unclaimed balances, and financial assets and outline the procedure for the administration of these balances, funds, and assets by banks and other financial institutions.
It stated that modalities for the transfer of the relevant balances/funds/assets to the CBN, together with the revised templates for the rendition of quarterly returns to the Banking Supervision Department or Other Financial Institutions Supervision Department, as the case may be, would be communicated subsequently.
The guidelines, which take immediate effect, supersedes an earlier circular issued in October 2015. The CBN pointed out that financial institutions hold deposit accounts and other financial liabilities in their books with no customer-induced activity over a period, thus, rendering the accounts dormant. It said the continuous maintenance of such accounts results in the accumulation of huge unclaimed balances at the disposal of the financial institutions for which the depositors may not be adequately compensated.
In addition, dormant and unclaimed balances are increasingly susceptible to fraudulent transactions or abuse, the apex bank stated.
“Essentially, the revised regulation seeks to curb abuses in the operation of dormant and inactive accounts set operational standards, and strengthen the oversight functions of CBN on the management of dormant and unclaimed balances.
In addition, it seeks to identify dormant accounts/unclaimed balances and financial assets intending to reunite them with their beneficial owners; hold the funds in trust for the beneficial owners; and establish a standard procedure for reclaiming warehoused funds.
Eligible accounts are dormant account balances that have remained with the Fls for a period of 10 years and beyond.”
Meanwhile, Cardoso has assured Nigerians of better days ahead. Cardoso also rolled outgrowth and economic stability indices during a statutory engagement with the Senate Committee on Banking, Insurance, and Other Financial Institutions.
The CBN Governor said, “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June 2024, indicating successful price discovery, increased market efficiency, and reduced arbitrage opportunities.
“The stock of external reserves increased to US$36.89 billion as of July 16, 2024, compared with US$33.22 billion in December 2023, driven largely by receipts from crude oil-related taxes and third-party receipts.
“In Q1 2024, we maintained a current account surplus and saw improvements in our trade balance.
“Our external reserves level as of end-June 2024 can finance over 11 months of import of goods and services, or 14 months of goods only.
“This is significantly higher than the prescribed international benchmark of 3.0 months, indicating a strong buffer against external shocks.
“The banking sector remains robust and diverse, comprising twenty-six commercial banks, six merchant banks, and four non-interest banks.
“Key indicators such as capital adequacy, liquidity, and non-performing loan ratios all showed impressive improvements, underscoring the sector’s growing stability and resilience.”
He assured the committee members, that required measures and strategies, had been mapped out to confront emerging challenges. To combat inflation, he said the apex bank had implemented a comprehensive set of monetary policy measures.
“Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy while adhering to international best practices,” he said
In his opening remarks, the Chairman of the Committee, Senator Adetokunbo Abiru said the overall purpose of the interaction was to update the committee on efforts, activities, objectives, and plans of the Bank for monetary policy”
In the meantime, the CBN on Friday disclosed that it sold $106.50 million to 29 ADBs between July 18 and 19, 2024, as part of efforts to improve supply in the FX market. CBN Director, Financial Markets Department, Dr. Omolara Omotunde Duke, disclosed this in a statement. She said the liquidity was provided to ADBs at the rate of between N1,498.00/$1 to N1,530.00/$1.
The CBN director also said the apex bank bought $9.5 million from four dealer banks at rates between N1,510.00/$1 and N1,550.00/$1 on July 19. She said the bank had commenced a regular sale of FX through ADBs and licensed Bureaux De Change (BDCs) in line with its price stability mandate and commitment to ensure a well-functioning and liquid market.
The CBN further clarified that recent movements in the foreign exchange market were driven largely by demand pressure from corporate entities and the expected seasonal uptick during the summer period. The CBN director further assured that the apex bank would continue to support various segments of the official markets with liquidity over the next few weeks, and closely monitor compliance with existing trading rules and regulations by authorized dealer banks to promote ethical conduct and support the drive to achieve stability in the foreign exchange market.
Credits; James Emejo and Sunday Aborisade (Arise News)
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