Dormant accounts: CBN slams N2m fine on erring banks

The Central Bank of Nigeria, CBN, has slammed a minimum fine of N2 million as penalty on banks that disobey its new guidelines on the management of dormant accounts, unclaimed balances and other financial assets in financial institutions in the country.

CBN defines a dormant account as a bank account that has remained inactive for a period of at least one year. An account is classified inactive if there has been no customer or depositor-initiated transaction for a period of six months after the last customer or depositor initiated transaction.

In the guidelines announced in a circular signed by the Director, Financial Policy and Regulation Department, CBN, Mr. Chibuzo Efobi, the apex bank added that a further daily penalty of N200,000 will be applied until full compliance.

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The apex bank stated: “A contravention of any provision of the guidelines shall attract a penalty of not less than N2 million. Failure to comply with CBN’s directive in respect of any infraction shall attract a further penalty of N200,000 daily until the directive is complied with or as may be determined by CBN.”

According to CBN, the guidelines were rolled out in response to the request of banks and other stakeholders for the apex bank to further clarify the procedure for the management of dormant and inactive accounts by banks in Nigeria.

The guidelines: “The financial institution shall bear the costs of maintaining inactive and dormant accounts as well as contacting the customers; Render quarterly reports on dormant accounts in a prescribed format to Banking Supervision Department and Other Financial Institutions Supervision Department, CBN; Notify account owners in writing through the agreed medium such as email, text message, and letter immediately an account becomes inactive/dormant; Reactivate dormant accounts upon request by the account owner or his/her legitimate representatives; Continue to reflect dormant account balances as deposit liabilities and such balances, where applicable, shall continue to earn interest until they are transferred to CBN.”

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In its electronic fact sheet for 2021, the Nigeria Interbank Settlement System, NIBSS, stated that the number of bank accounts stood at 191.4 million as at December 2021, while the number of active bank accounts were 133.5 million owned by 122.3 million active bank customers.

This indicates that 57.9 million inactive accounts were recorded during the period.