CBN Slams N2 Million Fine on Erring Banks Over Dormant Accounts|Omohglobalnews

 

The Central Bank of Nigeria (CBN) has mandated commercial banks in Nigeria to adhere to its guidelines on managing dormant accounts and unclaimed balances. Failure to comply with the directive will result in a fine of at least N2 million. Additionally, the CBN will impose a daily fine of N200,000 until full compliance is achieved.

The CBN has defined a bank account as dormant if it remains inactive for at least one year without any customer-initiated transactions for six months after the last transaction. The guidelines are aimed at clarifying the process for managing dormant and inactive accounts by Deposit Money Banks in Nigeria.

According to the guidelines, commercial banks or financial institutions are responsible for maintaining the cost of managing inactive and dormant accounts, including contacting customers and giving periodic reports on the accounts. When accounts become dormant, banks must notify account owners in writing via an agreed medium, such as emails, text messages, and letters.

The CBN intends to mop up funds in dormant accounts and invest them in Treasury Bills. The guidelines were issued in response to the request of commercial banks and other stakeholders seeking clarification on managing dormant accounts and unclaimed balances

Access, First Bank, UBA, and Other Commercial Banks Search for Cash, Borrow Billions from CBN

The Central Bank of Nigeria has provided N240.57 billion in short-term liquidity to Deposit Money Banks (DMBs), including Access Bank, First Bank, and United Bank of Africa, through its Standing Lending Facility (SLF). The SLF is a tool for managing liquidity that allows commercial banks to invest excess funds overnight and balance any shortages in the system at the end of each business day. According to CBN data, SLF borrowing by DMBs increased by 204.71% to N240.57 billion as of April 11, 2023, which may have been due to the currency redesign policy that led to cash shortages. Commercial banks need cash to fund their operations, pay customers, issue loans, and make investments, among other things. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, stated that banks’ frequent visits to the CBN lending window are due to the strict monetary policy environment, but it is a backup plan that banks can rely on if they face short-term liquidity issues.