CBN classifies inactive 10-year accounts as dormant

The Central Bank of Nigeria has clarified that only accounts that have been inactive for over 10 years are eligible to be classified as dormant and will be used for investment purposes.

It also stated that a dedicated office would be created to manage dormant accounts and unclaimed balances.

The apex bank disclosed this in its recently issued document titled, “FAQs – Guidelines on Dormant Account and Unclaimed Balances – July 25, 2024,” posted on its website.

The Guidelines on the Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions in Nigeria is a policy issued by the CBN that seeks to operationalise Section 72 of the Banks and Other Financial Institutions Act, 2020 and standardise the management of dormant accounts and unclaimed balances.

The CBN had earlier disclosed that it might invest funds from dormant accounts, unclaimed balances in Nigerian Treasury Bills, and other government securities.

According to the apex bank, it will manage these funds in trust, refunding the principal and any accrued interest to beneficiaries within 10 working days of receiving a reclaim request from the financial institution.

It stated, “Dormant accounts are accounts that have been inactive for more than 10 years.  Eligible accounts are dormant account balances that have remained with the FIs for 10 years or more.

“These eligible accounts include current, savings, term deposits in local currency, domiciliary accounts, deposits for shares and mutual investments, prepaid card accounts and wallets, government-owned accounts, and others as specified in the Guidelines by the CBN.”

The CBN also noted that financial institutions were required to notify customers immediately and every quarter when their accounts become inactive or dormant.

The FAQ document read, “The CBN shall establish a dedicated office for this purpose. The office will be supervised by a management committee.”

“The interest payable shall be at a rate to be determined by the CBN from time to time. For non-interest banks, the profit and loss on the unclaimed balances shall be determined by the CBN from time to time.

“The CBN will refund the principal and any interest on the invested funds to the beneficiaries within 10 working days of receiving a reclaim request from the FI.”

According to the new guidelines, the CBN will create and manage a dedicated account called the “Unclaimed Balances Trust Fund Pool Account” to warehouse unclaimed balances.

The guidelines specify that eligible accounts for dormant status 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.

Reactivating a dormant account involves account owners completing a reactivation form at their respective financial institutions, providing evidence of ownership and valid identification.

However, some accounts are exempt from being considered dormant, such as accounts subject to litigation, judgment debts under active court cases, accounts under regulatory investigation, and encumbered accounts like collaterals and liens.

Justifying this policy, the CBN Governor, Yemi Cardoso, said dormant accounts in Nigeria are more susceptible to fraudsters and the reason for the apex bank’s latest policy is for the safe keeping of the funds in dormant accounts.