The summary: “The Central Bank of Nigeria (CBN) has announced its plan to harvest funds from unclaimed balances, dividends and dormant accounts, potentially putting them in Nigerian Treasury Bills (NTBs) and other government securities. This announcement comes as part of the newly released “Guidelines on Management of Dormant Accounts, Unclaimed Balances, and Other Financial Assets in Banks and Other Financial Institutions in Nigeria,” which aims to standardize the handling of dormant accounts and unclaimed financial assets.”

Good People, this is a good policy. Nigerians should support the apex bank even though some people are distorting this policy, positing that the government wants to hijack people’s money. That is not true.

(The government noted that it would return the funds if later the owner comes up. Sure, I get the concern on the capacity of the Nigerian government to make the owner whole. Yet, that is not the real issue here as the risk there cannot be compared to the huge benefit of this policy. In other words, the benefits are clear and outweigh the risks.)

First, a dormant account of ten years is not being hijacked. Banks are smart, they will do everything possible to check on with the customer before the 10-year deadline, because no bank would like to lose deposits for the government. In other words, this policy will make banks check on with their customers at least from the 9th year! 

But where the bank is unable to get in contact with the customer in all forms, would you prefer the bank to keep that money or the government? Today, banks keep the funds, and most are stolen and illegally converted by bad actors in banks. In all developed economies, such funds are warehoused with the national treasury if the bank cannot establish contacts with the customer or next of kin or any beneficiary via the national ID.

In Nigeria, many people die and their spouses do not even know they have bank accounts. This will force banks to disclose owners of the accounts as they are being transferred to the federal government. The next level of advocacy is for the government to make that data public with original addresses/contacts used.

That man called “Eze-ego” (king of money) has died and within years, his family is begging for food,  because Eze-ego opened bank accounts no one knew about, and when he died, the banks did not reach the family on the pretense of “privacy” and wishes of our clients. Nonsense. With this policy, if the bank does not want the balance sent to the government, it must reach the family so that the account does not go dormant. 

I have been pushing for this policy and today, I commend Yemi Cardoso, the CBN Governor, for this policy. This is an A+ policy making. It must be put in the books in the National Assembly, not just a circular so that one crazy future Governor does not change it.

Remember #1 Rule for informally structured traders and business owners:  keep records of bank accounts, share certificates, etc and make sure spouses and kids know what you are doing since there is hardly any formal business structure!

My Response

On this being a hijacking: Imagine if you support your thesis with a reason. Someone is a thief here – either the bank or the government. The victim is that dead man who left N10m and the wife is begging for N100k to support the kids. Tell me why this is a theft when the government noted that it would return the funds in 10 days or so if the owner resurfaces. Dropping political correctness is nonsense because you are not bolder than Ndubuisi, but one thing is clear – I have no agenda, I make my calls irrespective of how anyone feels. Tell me why this is a “theft”

On lack of disclosure: At least under the whistleblower policy, someone is  open to jail time. Be the head responsible and hide it, some good persons can disclose and that is it. Making it a law means someone thinks before playing with the bank lords. That is the issue here – you do not beg them!

The Central Bank of Nigeria (CBN) has announced its plan to harvest funds from unclaimed balances, dividends and dormant accounts, potentially putting them in Nigerian Treasury Bills (NTBs) and other government securities.

This announcement comes as part of the newly released “Guidelines on Management of Dormant Accounts, Unclaimed Balances, and Other Financial Assets in Banks and Other Financial Institutions in Nigeria,” which aims to standardize the handling of dormant accounts and unclaimed financial assets.

The revised guidelines operationalize Section 72 of the Banks and Other Financial Institutions Act (BOFIA) 2020. These guidelines were formulated following extensive engagement and consultation with relevant stakeholders, whose feedback and recommendations were incorporated into the final document. The guidelines provide a structured approach for the administration of dormant accounts, unclaimed balances, and other financial assets, ensuring transparency and consistency in their management.

According to the guidelines, the CBN will establish a dedicated account called the “Unclaimed Balances Trust Fund (UBTF) Pool Account” to manage these funds. The guidelines mandate that both the principal and any accrued interest from these investments must be refunded to beneficiaries within ten working days of receiving a request.

The guideline document specifies:

1. The CBN shall open and maintain the ‘UBTF Pool Account’.
   It shall maintain records of the beneficiaries of the unclaimed balances stored in the UBTF Pool Account.
2. The funds will be invested in Nigerian Treasury Bills (NTBs) and other securities as approved by the ‘Unclaimed Balances Management Committee’.
3. The principal and interest (if any) on the invested funds will be refunded to the beneficiaries within ten working days of receiving a request.
4. If an extension of the timeline is necessary, a notice of extension, including reasons, shall be communicated to the requesting financial institution (FI).

Eligible Accounts and Exemptions

The guidelines define eligible accounts as those that have remained dormant for ten years or more, encompassing various account types such as current, savings, term deposits, domiciliary accounts, and prepaid card accounts. Other financial assets eligible under these guidelines include proceeds from unclaimed financial instruments, unclaimed salaries, wages, and bonuses.

However, certain accounts are exempt from these provisions. Accounts that are subject to litigation, under investigation by regulatory authorities or law enforcement agencies, or encumbered accounts (such as those with liens or used as collateral) are not included in the guidelines.

CBN’s Responsibilities

The CBN is charged with maintaining the UBTF Pool Account, overseeing the management committee, and ensuring adherence to the guidelines. The bank will publish the list of owners of unclaimed balances and the procedures for reclaiming these funds on its website.

Additionally, the CBN will issue an annual notice in three national daily newspapers, inviting the public to review details of outstanding unclaimed balances under its custody.

Financial institutions are mandated to monitor inactive accounts, notify customers of inactivity, and protect these accounts from unauthorized usage. They must also publish details of dormant accounts and transfer eligible unclaimed balances to the CBN’s UBTF Pool Account quarterly. Furthermore, financial institutions are required to maintain records and publish notices regarding the process of reclaiming unclaimed balances.

In instances where financial institutions are liquidated, the Nigeria Deposit Insurance Corporation (NDIC) will assume the role of the financial institution. The NDIC’s involvement ensures that unclaimed balances in liquidated institutions are managed and transferred in accordance with the guidelines, safeguarding the interests of the account owners and ensuring compliance with regulatory standards.

Account owners are also tasked with responsibilities. They must inform financial institutions of any changes in their personal information and submit applications for reclaiming their funds. Proper proof of ownership must be provided, and the procedures outlined in the guidelines must be followed.

These measures aim to enhance transparency and ensure that unclaimed balances are adequately managed and returned to their rightful owners.

In the new guidelines, the CBN stated that the modalities for the transfer of the relevant balances, funds, and assets to the CBN, along with the revised templates for the quarterly returns to the Banking Supervision Department or Other Financial Institutions Supervision Department (as applicable), will be communicated subsequently.

Join us at Tekedia Mini-MBA today as we discuss equity investing, focusing on cap table, company valuation, MFN (most favoured nation) and SAFE (Simple Agreement for Future Equity).

After this session and extending the lecture by our Faculty on Thursday, you can confidently create a model on the worth of your business, and  from that build a cap table, and allocate the company shares, considering monetary investments, efforts with co-founders, etc.

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