Central Bank of Nigeria to Utilise Dormant Accounts For Investment

The Central Bank of Nigeria (CBN) has issued a clarification regarding its policy on dormant accounts, specifying that only those inactive for more than a decade will be classified as dormant and eligible for investment purposes. This announcement is part of the newly released document, “FAQs Guidelines on Dormant Account and Unclaimed Balances – July 25, 2024,” available on the CBN’s website.

Under these guidelines, the CBN will establish a dedicated office to manage dormant accounts and unclaimed balances, thereby operationalising Section 72 of the Banks and Other Financial Institutions Act, 2020. The policy aims to standardise the handling of these accounts across financial institutions.

The CBN had previously indicated that funds from dormant accounts and unclaimed balances might be invested in Nigerian Treasury Bills and other government securities. The bank assures that these funds will be managed in trust, with the principal and any accrued interest refundable to beneficiaries within 10 working days upon receiving a reclaim request from the relevant financial institution.

“Dormant accounts are those that have been inactive for more than 10 years,” the CBN document states. “Eligible accounts include current, savings, term deposits in local currency, domiciliary accounts, deposits for shares and mutual investments, prepaid card accounts and wallets, and government-owned accounts, among others specified in the guidelines.”

Financial institutions are required to notify customers as soon as their accounts become inactive and to continue notifications quarterly thereafter. The document further states, “The CBN shall establish a dedicated office for this purpose, supervised by a management committee.”

Interest on these dormant accounts will be determined periodically by the CBN. For non-interest-bearing accounts, the profit and loss will also be set by the CBN. The apex bank will refund both the principal and interest within 10 working days of a reclaim request.

To manage these dormant accounts, the CBN will create an “Unclaimed Balances Trust Fund Pool Account.” Reactivating a dormant account requires account owners to complete a reactivation form at their financial institution, providing evidence of ownership and valid identification.

Certain accounts are exempt from being classified as dormant, including those subject to litigation, judgment debts under active court cases, accounts under regulatory investigation, and encumbered accounts such as collaterals and liens.

CBN Governor Yemi Cardoso justified the new policy by noting that dormant accounts in Nigeria are particularly vulnerable to fraud. The latest measures, he explained, are designed to safeguard the funds in these accounts, ensuring their security and proper management.