Jubilation as CBN bans charges for revalidation of dormant accounts

Bank customers across the country yesterday erupted in jubilation as the Central Bank of Nigeria (CBN) banned banks from charging customers for revalidation of dormant accounts.

This is one of the highlights of the draft guidelines for the management of dormant accounts by banks in Nigeria released yesterday by the apex bank. The CBN also said that banks must continue to pay interest rate on dormant accounts, and make efforts to contact the account holder or next-of-kin for revalidation of such accounts.

The CBN said that the purpose of the guidelines among other things is to: Curb possible abuse in the operation of dormant accounts; Ensure that dormant account funds are identified and channeled through appropriate institutions to make it more productive to the economy; and eliminate the possibility of banks converting dormant accounts balances to income.

Among other things the guidelines differentiated between an Inactive Account and a Dormant Account. It stated, “A bank account is classified as inactive if there has been no customer or depositor-initiated transaction in it for a period of six (6) months after the last customer or depositor-initiated transaction; A bank account shall be classified as dormant if there has been no customer or depositor initiated transaction in it for a period of six (6) years after the last customer or depositor-initiated transaction.

The apex bank stated that, “Accounts shall retain their interest earning status during the period of dormancy in the bank; Deposit taking financial institutions shall continue to monitor accounts that

show tendencies of inactivity and where necessary, initiate actions for their activation or protection from wrong usage; Once dormant accounts exceed a six year period, they shall be reported to the CBN along with efforts made by the obligor bank to locate the owners or their personal representatives; Three months to the end of six years indicated in above, both the account holder and the next-of-kin shall be notified;

Revalidation of inactive/dormant accounts shall not attract any charge to the account holder as the banks would have made ample use of the idle funds; Dormant account balances shall continue to be reflected in the books of banks as deposit liabilities until they are eventually withdrawn by the account holders or disposed of on their instructions;

Dormant accounts balances shall, therefore, be regarded as deposits and shall be covered by Deposit Insurance;

“In the case of government-owned inactive/dormant accounts, banks shall notify the relevant government agency of their existence, with periodic returns of such notification sent to Banking Supervision Department.