Lawmakers engage CBN on reversal of customer funds within set periods

The Central Bank of Nigeria (CBN) has been urged to mandate Deposit Money Banks (DMBs) and other financial institutions to reverse customers’ funds within the stipulated periods.

This followed a motion moved in the House of Representatives by Hon. Emmanuel Ukpong-Udo titled: “Need to Restrain Commercial Banks from Holding Funds Reversal Beyond the Date Prescribed by the Central Bank of Nigeria."

According to Ukpong-Udo, the DMBs were demanded to overhaul their payment systems to put an end to failed transactions and also affect the immediate reversal of funds after a failed transaction.

Recall the CBN in 2020, issued new directives for reversal of stuck customer funds.

According to the apex bank, when customers encounter a failed transaction when using their cards on their bank ATMs, the funds would be instantly reversed from the current timeline of three days. In the case where the instant reversal failed due to system glitches, the timeline for manual reversal was not to exceed 24 hours.

The guidelines further noted that refunds for failed transactions that occur where customers use their cards on other bank’s ATMs should not exceed 48 hours from the current three to five days, while resolution of disputed and failed POS or web transactions should be concluded within 72 hours from the current five days.

The stakeholders which include the Nigeria Interbank Settlement System, NIBSS, the CBN, and the DMBs have been blamed for the difficulties faced by customers when initiating requests for a reversal of failed electronic payment transactions.

The CBN said the surge in electronic transactions by bank customers and malpractices on the part of banks were some of the factors responsible for the delays experienced by customers concerning the reversal of failed transactions.

The DMBs on their part, blamed the slow rate of funds reversal on the NIBSS which is also referred to as the central switch. Some bankers also cited the recent increase in the adoption of Internet banking by customers coupled with the fact that all the banks in the country are interconnected via the NIBSS, which serves as the settlement platform.

The NIBSS on their part, have denied being responsible for the failed transactions. The body expressed readiness to work with the financial institutions to address prompt reversals to customers.

Speaking further, Ukpong-Udo mentioned that as of July 2019, out of all the complaints in the financial sector, the percentage of complaints associated with failed transactions was 69% adding that the high rate of failed bank transactions is causing a decrease in business investments and lending across the country.