CBN Orders Banks to Transfer Dormant Accounts, Unclaimed Balances, Others to its Custody

*Again, Cardoso assures of better days ahead for Nigerians 

*Apex bank injects $106.50m to boost liquidity in FX market

James Emejo and Sunday Aborisade in Abuja

The Central Bank of Nigeria (CBN) yesterday unveiled new revised guidelines on the management of dormant accounts, unclaimed balances and other financial assets in banks and Other Financial Institutions (OFIs) in the country.
The new framework mandates the financial institutions to 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, yesterday, in Abuja, rolled out indices, signaling improved growth and stability of the Nation’s economy, and assured Nigerians of better days ahead.
Also yesterday, 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, Financial Policy and Regulations Department, Mr. John Onoja, and addressed to all banks and OFIs.

According to the central bank, the guidelines seek to standardise the management of dormant accounts, unclaimed balances and financial assets, and outlines 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 Banking Supervision Department or Other Financial Institutions Supervision Department, as the case may be, would be communicated subsequently.
The guidelines, which takes 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 to 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 and set operational standards, and to 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 with a view to reuniting them with their beneficial owners; hold the funds in trust for the beneficial owners; and establish a standard procedure for reclaim of warehoused funds.

Eligible accounts are dormant accounts 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 out growth 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 at end-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 at 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 with respect to monetary policy”

In the meantime, the CBN yesterday 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 was 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 authorised dealer banks to promote ethical conduct and support the drive to achieve stability in the foreign exchange market.