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The Central Bank of Nigeria (CBN) unveiled revised guidelines on Friday for managing dormant accounts, unclaimed balances, and other financial assets within banks and other financial institutions (OFIs) across the nation.
This new framework requires financial institutions to transfer accounts that have remained dormant for ten years or more to the custody of the CBN.
The announcement came as CBN Governor, Mr. Olayemi Cardoso, detailed key economic growth and stability indicators in Abuja, reassuring Nigerians of better economic prospects.
Additionally, the CBN revealed that it sold $106.50 million to 29 Authorized Dealer Banks (ADBs) between July 18 and 19, 2024, in efforts to boost foreign exchange (FX) market supply.
The revised guidelines were detailed in a circular dated July 19, 2024, signed by Mr. John Onoja, Director of the Financial Policy and Regulations Department, and addressed to all banks and OFIs.
The guidelines aim to standardize the management of dormant accounts, unclaimed balances, and financial assets, detailing the procedure for handling these funds by banks and other financial institutions.
The CBN indicated that specific procedures for transferring the relevant balances, funds, and assets to the CBN, along with revised templates for quarterly returns to the Banking Supervision Department or Other Financial Institutions Supervision Department, would be communicated subsequently.
Effective immediately, these guidelines supersede an earlier circular issued in October 2015.
The CBN highlighted that financial institutions maintain deposit accounts and other financial liabilities with no customer activity over a period, rendering the accounts dormant. The continuous maintenance of such accounts results in the accumulation of significant unclaimed balances, for which depositors may not be adequately compensated.
Moreover, dormant and unclaimed balances are increasingly vulnerable to fraudulent transactions or misuse, according to the apex bank.
The revised regulation aims to curb abuses in the operation of dormant and inactive accounts, establish operational standards, and strengthen the CBN’s oversight of dormant and unclaimed balances.
It also seeks to identify dormant accounts and unclaimed balances with the intent to reunite them with their rightful owners, hold the funds in trust for the beneficial owners, and establish a standard procedure for reclaiming warehoused funds. Eligible accounts include dormant account balances that have remained with financial institutions for a period of ten years and beyond.
Meanwhile, Governor Cardoso assured Nigerians of better economic times ahead, highlighting improvements in economic and stability indices during a statutory engagement with the Senate Committee on Banking, Insurance, and other Financial Institutions.
“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,” Cardoso said.
He noted that external reserves had increased to $36.89 billion as of July 16, 2024, compared with $33.22 billion at the end of December 2023, driven by receipts from crude oil-related taxes and third-party payments.
“In Q1 2024, we maintained a current account surplus and saw improvements in our trade balance. Our external reserves level at,” Cardoso continued.
He assured the committee members that comprehensive measures and strategies had been outlined to tackle emerging challenges, and emphasized that the apex bank had implemented a robust set of monetary policy measures to combat inflation.
“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,” Cardoso affirmed.
In his opening remarks, Senator Adetokunbo Abiru, Chairman of the Committee, emphasized the purpose of the interaction was to update the committee on the bank’s efforts, activities, objectives, and plans regarding monetary policy.
In the meantime, the CBN disclosed that it had sold $106.50 million to 29 ADBs between July 18 and 19, 2024, to enhance FX market supply.
CBN Director, Financial Markets Department, Dr. Omolara Omotunde Duke, confirmed this in a statement, noting that the liquidity was provided to ADBs at rates between N1,498.00/$1 and N1,530.00/$1. The CBN also purchased $9.5 million from four dealer banks at rates between N1,510.00/$1 and N1,550.00/$1 on July 19.
The CBN stated that it had commenced regular FX sales through ADBs and licensed Bureaux De Change (BDCs) in line with its price stability mandate and commitment to ensuring a well-functioning and liquid market.
The recent movements in the foreign exchange market were largely driven by demand pressure from corporate entities and the expected seasonal uptick during the summer period, the CBN explained. The CBN director assured that the apex bank would continue to support various segments of the official markets with liquidity in the coming weeks and closely monitor compliance with existing trading rules and regulations by authorized dealer banks to promote ethical conduct and support the drive to achieve stability in the foreign exchange market.
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