Why CBN can take over money in dormant accounts

Published by

2 years ago

The Central Bank of Nigeria (CBN) is about to kickoff another of its policies and this directly affects individuals; it has stated that banks should transfer funds in accounts that have been dormant for up to 10 years into a trust fund account.

This means the CBN is taking over funds in your dormant accounts and will be investing it in government securities like treasury bills and others.

But contrary to belief in some quarters, the policy is not unique to Nigeria and is a global practice across the world; it is acceptable in the USA that the state as sovereigns may take custody or assume title to abandoned personal property, and this process is commonly referred to as “escheat.”

Across the world, it is an indisputable fact that vast sums of money are lying unclaimed within the banking system due to factors like death of the account holders, emigration, oversight by the account holders and inadequate documentation among others.

Primarily, this move will help the CBN to increase its asset base and shore up the economy considering the fact that the electronic fact sheet for 2021 of the Nigeria Interbank Settlement System, revealed that there were about 57.9 million inactive accounts in Nigeria.

The current policy on how funds in dormant accounts are dealt with was set out in a policy document issued by the CBN in 2015 which stipulates that when an account is inactive, the funds stay with the bank and shall continue to be reflected in the books of the banks as deposit liabilities until they are eventually withdrawn by the account holders. This means no matter how long the account is dormant – the money stays in the bank.

But in 2020, the Federal Government passed the Finance Act 2020, and in Section 77 it created ‘an Unclaimed Dividend Trust Fund (UDTF)and stated that any unclaimed dividend of a public limited liability company quoted on the stock exchange and any unutilised amounts in a dormant bank account which has remained unclaimed or unutilised for a period of not less than six years shall be transferred immediately to the UDTF.

Though it seems suits were initiated to contest this section of the Finance Act, the status of the case is unknown at present.

In May 2022 the SEC announced that it had remitted N170 billion worth of unclaimed dividend to the UDTF.

So CBN is using its powers under the CBN Act to issue a policy which it had already previously issued on in the past. So if you have an account that had been dormant for at least 10 years (as opposed to the 6 years in the Finance Act provision), you are on the verge of losing your funds.

However, the new policy is not yet in force and is still in draft form, the CBN has said it welcomes input from banks and stakeholders, so you can make your grouse or support for the policy known to CBN through fprd_cedg@cbn.gov.ng before tomorrow, April 27, 2023.

READ ALSO FROM NIGERIAN TRIBUNE