CBN Takes Control of N20trn in Dormant Accounts, Sparking Anxiety, to Invest in Treasury Bills, Others

In the new directives, the apex bank will take over the funds in such dormant accounts and invest them in treasury bills and other securities.

This was contained in a circular FPR|DIR|PUB|CIR|002|011 released on Friday July 19, 2024 by John S. Onojah, Ag Director, Financial Policy & Regulation Department and titled “Guidelines On Management Of Dormant Accounts, Unclaimed Balances And Other Financial Assets In Banks And Other Financial Institutions In Nigeria”.

In the circular obtained by The Stallion News, the apex bank noted that it shall open and maintain an account earmarked for the purpose of warehousing unclaimed balances in eligible accounts.

“CBN shall treat unclaimed balances (dormant accounts and financial assets) as follows: Open and maintain an Unclaimed Balances Trust Fund (UBTF) Pool Account’, maintain records of the beneficiaries of the unclaimed balances warehoused in the UBTF Pool Account; invest the funds in Nigerian treasury bills (NTBs) and other securities as may be approved by the ‘Unclaimed Balances Management Committee’.

“Refund the principal and interest (if any) on the invested funds to the beneficiaries not later than ten (10) working days from the date of receipt of the request.  Where it is imperative to extend the timeline, a notice of extension shall be communicated to the requesting FI stating reasons for the extension” the circular stated.

The circular further disclosed that the apex bank will establish standard procedures for reclaim of warehoused funds; resolve escalated complaints relating to reclaim of warehoused funds.

The apex bank will also be saddled with the responsibilities of publishing annually on its website, the list of owners of unclaimed balances that have been transferred to the ‘UBTF Pool Account’; publishing on its website, the procedure for reclaim of warehoused funds and other financial assets; and publish annually a notice in three national daily newspapers inviting members of the public to check details of outstanding unclaimed balances in its custody” amongst others.

Earlier in April, the apex bank had unveiled the draft stage of the guideline.

This online media understands that what the CBN wants to do is exactly what the Securities and Exchange Commission (SEC) has done with unclaimed dividends by channelling the funds into Unclaimed Funds Trust Fund.

However, it is feared that this will also put the country’s financial institutions under pressure as banks are alleged to be making bulk of their money from dormant and unclaimed funds.

When the draft guideline was unveiled, stakeholders like the Chief Executive Officer (CEO) of Highcap Securities Limited, David Adonri, had expressed worries over the workability of the move.

He noted that while it might not be ill-intended, he feared removing the funds from the grips of the banks could strain their operations as those financial institutions had been feeding fat on the idle funds for a long time.

“It is unlikely the CBN will make good use of the funds for societal good, anyway. Generally, we expect that the private sector will be the engine room for the development of the country as the majority of the credit available in the country ought to flow to the private sector. Unfortunately, we have a government that wants to do everything,” he posited.