The Central Bank of Nigeria (CBN) has issued a directive mandating all banks and financial institutions to display information about dormant accounts, unclaimed balances, and other financial assets on their websites.
On behalf of the Director of the Financial Policy and Regulation Department of CBN, Michael Akuka signed a circular titled “Guidelines on Management of Dormant Accounts, Unclaimed Balances, and Other Financial Assets in Banks and Other Financial Institutions in Nigeria,” which contained the guidelines.
The CBN requires financial institutions to list the names of those authorized to manage accounts, the kind of account, and the branch where the account is located on their official websites.
If other financial institutions (OFIs) don’t have a website, they must post the information on their association’s website.
The Directive
“In furtherance thereof, and in response to inquiries from stakeholders regarding the possible breach of the Nigeria Data Protection Act, 2023 (NDPA), banks and other financial institutions are required to note the following,” the CBN stated.
- Section 25 (b) of the NDPA permits justifiable deviations from its general principles. Additionally, Section 72 (ii) of the Banks and Other Financial Institutions Act mandates the Central Bank of Nigeria to issue guidelines on the administration of unclaimed funds in banks and other financial institutions.
- The account holder’s name, the kind of account, the bank name, and the branch where the account is domiciled are the only details that must be posted on the banks’ websites and, if relevant, the association.
The CBN also mandated that information containing the previously mentioned details be published yearly in at least two national daily newspapers or on the websites of state and unit microfinance banks.
What To Note
- A bank account that has not been used for a minimum of a year is considered dormant.
- Earlier this week, the Nigerian banking regulator issued a broad mandate requiring commercial banks to adhere to more stringent risk regulatory sanctions or insider lending limits.
- According to a letter sent to banks, the CBN gave financial institutions 180 days to regularize any insider-related loan facilities beyond the statutory limits outlined in the Banking and Other Financial Institutions Act (BOFIA) 2020.
The action is a part of larger initiatives to remedy governance shortcomings and limit undue exposure to prominent or politically connected insiders, which has long been a problem in Nigeria’s financial industry.
The CBN has now said unequivocally that banks have six months to reduce all insider-related exposures to regulated levels.
Section 19 of BOFIA 2020, which caps lending to insiders at a percentage of a bank’s overall loan book, is the central component of the directive. Some banks have been granted CBN authorization for insider-related facilities in recent years, but there are no set compliance deadlines, which allows for regulatory arbitrage.
