The Central Bank of Nigeria (CBN) has announced a new policy clarifying that only accounts inactive for over ten years will be classified as dormant and utilized for investment purposes. This initiative aims to standardize the management of dormant accounts and unclaimed balances across financial institutions in Nigeria.
In its recently issued document titled “FAQs – Guidelines on Dormant Account and Unclaimed Balances – July 25, 2024,” the CBN outlined the details of this policy. The guidelines are designed to operationalize Section 72 of the Banks and Other Financial Institutions Act, 2020, ensuring a standardized approach to managing dormant accounts and unclaimed balances.
The CBN revealed that it may invest funds from these dormant accounts in Nigerian Treasury Bills and other government securities. Managed in trust, the principal and any accrued interest will be refunded to beneficiaries within ten working days upon receiving a reclaim request from the financial institution.
“Dormant accounts are those inactive for more than ten years,” the CBN stated. Eligible accounts include current, savings, term deposits in local currency, domiciliary accounts, deposits for shares and mutual investments, prepaid card accounts and wallets, government-owned accounts, and others as specified by the CBN guidelines.
To enhance the management of these funds, the CBN will establish a dedicated office supervised by a management committee. Financial institutions are required to notify customers immediately and every quarter when their accounts become inactive or dormant.
The CBN document further clarified, “The interest payable shall be at a rate determined by the CBN from time to time. For non-interest banks, the profit and loss on the unclaimed balances will also be determined by the CBN periodically.”
A new account, the “Unclaimed Balances Trust Fund Pool Account,” will be created to warehouse unclaimed balances. Account owners wishing to reactivate dormant accounts must complete a reactivation form at their respective financial institutions, providing evidence of ownership and valid identification.
Certain accounts, however, are exempt from being classified as dormant. These include accounts under litigation, judgment debts in active court cases, accounts under regulatory investigation, and encumbered accounts such as collaterals and liens.
Explaining the rationale behind this policy, CBN Governor Yemi Cardoso highlighted the susceptibility of dormant accounts to fraud. The new policy is intended to safeguard the funds in these accounts, ensuring they are protected from potential fraudulent activities.
