CBN to compel banks to invest funds in dormant accounts in govt assets
The Central Bank of Nigeria (CBN) has been empowered by the recently signed Banks and Other Financial Institutions Act (BOFIA) 2020 to compel financial institutions to create dormant account registers for the purpose of transferring and investing the pool of funds left in such accounts by their customers.
The new banking regulations made provisions for the management of dormant accounts, verification of owners, regular filing of reports to the CBN on such accounts and the investment of the funds in the register of dormant accounts by banks.
According to the new law, any savings or current accounts that were not operated by customers for a period of one year or as specified by the concerned banks would be transferred to a separate register of dormant accounts by the bank.
BOFIA stated that transactions should be suspended on such account unless authorised by two signatories of the banks while the funds remain as part of the deposit liabilities in the books of the bank.
Other measures to be adopted by the bank include the investment of the funds in the register of dormant accounts in government debt instruments while any interest accrue to the accounts would be transferred to the owners whenever they come for their account after fulfilling the stipulated requirements.
Banks are also required to submit to the central bank quarterly reports on all dormant accounts stating the efforts made by the financial institutions to locate the account holders.
It prescribed that an account, which has been transferred under sub-section (2) of BOFIA, may only be transferred out of the register following a request by the depositor or the legal representative of the depositor, where such depositor is dead or incapacitated, once all necessary identification and evidence of account ownership has been established by the bank.
“Where an account has been in the register of dormant accounts for 10 years, the bank, specialised bank or other financial institution shall after the advertisement under subsection (5) of this section, transfer the balance on the account including the interest earned to an account earmarked for that purpose at the bank.
“Where a balance has been transferred under sub-section (8) of this section, the bank shall refund the balance to the depositor, or if the depositor is deceased, to the legal representative of the depositor’s estate, once the bank is satisfied that the claimant is the owner of the funds requested.
“The bank shall invest the funds deposited with it pursuant to sub-section (8) of this section, in treasury bills or other securities as the bank, may determine and interest accrued on any such sums shall be payable to any claimant pursuant to subsection (9) of this section.
“The bank shall issue guidelines on the administration of unclaimed funds in banks, specialised banks and other financial institutions pursuant to the provisions of this Act.”
A dormant account is described as savings or current accounts with banks which no transaction was made for a long period of time by the customers.