The Central Bank of Nigeria (CBN) has banned banks from converting funds that are in dormant accounts into income. The apex bank has directed that banks that have converted such funds into income in the last five years to reclassify such funds as deposits.
The ban was part of a document titled Management of Dormant Accounts and Other Unclaimed Funds by Banks and Other Financial Institutions in Nigeria, which was released by the CBN on Friday.
According to the guidelines, “Dormant account shall continue to be reflected in the book of banks as deposit liabilities until they are eventually withdrawn by the account holders or disposed of, on their instructions."
“Banks that have, in the last five years, from the date of these guidelines, appropriated credit balances in dormant accounts to income are to reclassify such accounts to deposits not later than six months from the effective date of the guidelines."
“Notwithstanding the provisions above, banks shall retain the records of all dormant accounts irrespective of the number of years of dormancy of the accounts, and shall reactivate such accounts upon request by the bona fide account holder or his /her legitimate representatives.”
Speaking to the reactivation of dormant/inactive accounts, the guidelines read, “Hence forth, revalidation of inactive/dormant accounts shall not attract any cost to the account holder (as the bank would have made ample use of the idle funds)."
“Interest bearing accounts shall retain their interest earnings status during the period of dormancy; Deposit taking financial institutions shall continue to monitor accounts that show tendencies of inactivity and initiate action for the reactivation or protection from wrong usage. Such actions shall include, though not limited, to any of the following: SMS, email, visitation, and/or phone calls. In all cases, the cost of monitoring the accounts and contacting the customers shall be borne by the bank.”