CBN to Raise N20 Trillion as It Takes Over Dormant Accounts of Nigerian Banks' Customers
- The CBN will have N20 trillion transferred from Nigerian banks to its vaults following a new announcement
- The Nigerian apex bank had ordered that accounts dormant for at least ten years be transferred to its custody
- The new guidelines initiated by the CBN aim to standardise the management of these funds and curb potential abuses
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
The Central Bank of Nigeria (CBN) is poised to receive approximately N20 trillion from banks as it takes control of balances in dormant customer accounts.
On Friday, July 19, 2024, the apex bank mandated that accounts inactive for a minimum of 10 years be transferred to its custody.
Source: UGC
This move aims to standardise the management of these funds and prevent potential misuse.
The initiative is part of new guidelines introduced by the CBN to improve oversight and ensure that these funds are properly managed for the benefit of their rightful owners.
CBN expects massive N20 trillion transfer
According to Leadership, previous data from the CBN show that dormant account balances in Nigerian banks have surpassed N20 trillion.
With nearly 20 million inactive bank accounts in the country, the CBN has instructed banks to transfer funds from these dormant accounts into the “Unclaimed Balances Trust Fund (UBTF) Pool Account” managed by the CBN.
Data from the Nigeria Interbank Settlement System (NIBSS) indicates that, as of the end of the first quarter of this year, there are 19.799 million dormant bank accounts, making up 6.81% of all bank accounts in Nigeria.
CBN orders transfer of dormant account funds
The latest CBN circular has established procedures for managing dormant accounts, unclaimed balances, and financial assets.
It details the steps banks and other financial institutions in Nigeria must follow in administering these funds and assets.
According to the new guidelines, account balances that have remained dormant for ten years will be moved to a pooled account.
Additionally, banks are required to publish information about all dormant accounts on their websites six months before they become eligible for transfer to the CBN.
The latest move by the CBN comes as no surprise, given that Governor Yemi Cardoso announced intentions to intensify monetary tightening to mitigate inflation risks and bolster the foreign exchange market.
Using idle funds for economy
Reacting to the CBN's decision on the custody of dormant accounts, Frank Uwa, a financial analyst, told Legit.ng that the move is aimed at ensuring idle funds contribute to the economy.
He said:
"The Central Bank of Nigeria's decision to take over dormant bank accounts is a significant move aimed at improving financial inclusion and ensuring idle funds contribute to the economy.
"While this initiative could help in reducing the number of dormant accounts and unlocking stagnant funds for productive use, it also raises concerns about customer autonomy and trust in the banking system.
"Transparency in the process and clear communication to account holders will be crucial to mitigate potential backlash."
He added that ensuring that dormant account holders are adequately informed and given ample opportunity to reactivate their accounts is essential to balance economic benefits with customer rights.
CBN sells 20,000 dollars each to BDC
In related news, Legit.ng previously reported that the CBN had initiated another round of dollar sales to licensed Bureau De Change (BDC) operators.
This measure, according to the CBN, aims to maintain liquidity in the retail market for eligible invisible transactions.
As outlined in a new circular released on Thursday, July 18, the apex bank will sell $20,000 to licensed BDC operators at a rate of N1,450 per US dollar.
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Source: Legit.ng
