(http://ngrguardiannews.com/images/resized/images/stories/2011/february2011/cbn_200_160.jpg) BANKS may have more explanations to give to the Central Bank of Nigeria (CBN) from today on the surge in the number of their customers rushing to close their accounts during and after the conclusion of the recent customers accounts' update. To the shock of most banks, their customers, especially those in the net worth category, instead of complying with the CBN directives, opted to close their accounts.
But the apex bank, which will on March 7, 2011 begin an assessment of the banks' compliance with the directive, has launched an inquiry into the list and composition of dormant accounts in the banking industry.
A dormant account is one that has remained inactive from six months upwards. This means that the owner may have either failed to pay in or withdrawn money from the affected account during the stipulated period.
In a memo to all the banks in the country, the CBN mandated them to forward to it the list of all dormant accounts and the balances thereon latest today.
A source in the CBN told The Guardian at the weekend that the management had learnt from the banks that some of their customers had opted to close their accounts rather than update them as demanded by the apex bank.
Also, the CBN has turned down an appeal by operators of micro-finance banks for the removal of the 20 per cent ratio to shareholders' fund ceiling on their investment in fixed assets. he cap introduced under the new prudential guidelines for operators in the Micro-Finance Banks (MFBs) sub-sector is aimed at ensuring that the banks deploy their funds primarily to lending to the targeted entrepreneurs at the lowest rung; protect depositors and investors, and also halt the seeming competition in asset acquisition between them and the universal banks. A senior CBN official said while it is the right of every bank customer who wishes to close his/her account to do so without hindrance from any quarter, the timing of such actions is our concern."
He said the CBN is also interested in the dormant accounts because they could be converted by some unscrupulous elements in the banking system to their personal use without the authentic owner or even the regulatory authorities being any wiser. The official said based on the above premise, the CBN had directed the banks to forward the list and other information related to such accounts to it before the closure of business today.
The details on such accounts to be submitted to the CBN include the name of the account (customer), account number, balance on account at the date of closure, and particulars of cheque or bank cheque issued. Others are the names of the beneficiary written on the cheque/bank cheque issued to close the account and the name of the bank that presented the cheque/bank cheque issued in closing the account.
Last year, the Independent Shareholders Association of Nigeria (ISAN) had urged the CBN to direct banks to publish the names of all dormant account holders in their books. The publication, according to ISAN, should not disclose amounts in those accounts "in the interest of security and privacy." National Co-ordinator of ISAN, Sunny Nwosu, had explained that due to the secrecy surrounding investments in Africa, especially in Nigeria, some account holders deliberately do not give enough information regarding their savings.
Receiving operators of MFBs in Abuja at the weekend, who were in Abuja to appeal for the removal of asset investment cap, the CBN Deputy Governor, Financial System Stability (FSS), Dr. Kingsley Moghalu, told them that their request could not be granted to avoid a repeat of the situation that lead to many MFBs abandoning the purpose for which they were established because of their ostentatious lifestyles, leading to both the investors and depositors' funds being threatened.
He said: "The purpose of this particular clause is to ensure that the operators have sufficient funds to operate with rather than deploying this meagre funds to the acquisition of fixed assets, which are mostly not helpful to their liquidity positions.
"It is not in the interest of the CBN to formulate policies that are inimical to the growth of MFBs, however, it is pertinent to sanitise the sector so as to realise the full potential of the sector as a veritable vehicle in the financial inclusion policy," he said. Moghalu hinted that a new micro-finance policy frame-work would soon be released to address the misconception and help in the proper understanding of micro-finance concept, capital base, regulatory capacity framework and certification training, among others, with a view to making MFBs play their role in developing the economy.
He also spoke of plans by the apex bank to set up an MFB fund to support the industry and make it self-sustaining, and appealed to them to sustain it by promptly repaying loans accessed from the planned fund once it comes on stream. He also directed the operators to embrace information technology infrastructure and shared services' platforms in the conduct of their operations as a way of cutting down cost and facilitating their timely rendition of returns. The CBN boss reminded them that June 2011 has been set as the deadline for the operators to comply with the directive on the IT infrastructure, noting that the CBN was prepared to render genuine assistance to the industry to ensure compliance. Earlier, the National Chairman of the National Association of Micro-finance Banks (NACBs), Chief Mathias Umeh, appealed to the CBN to assist in restoring public confidence in the sector, which was allegedly eroded by the recent revocation of licences of several MFBs..
According to him, the incident adversely affected the fortune of the sector in attracting genuine investors and depositors.
He, therefore, urged the CBN to put in place a bail-out fund to assist them in recovery from "shocks.". Umeh also appealed to the apex bank to review the 20 per cent ceiling on the fixed assets as a ratio of shareholders' funds as enshrined in the prudential guidelines as many operators had invested heavily in fixed assets such as office buildings.
Source: CBN demands dormant accounts' details from banks (http://ngrguardiannews.com/index.php?option=com_content&view=article&id=40020:cbn-demands-dormant-accounts-details-from-banks&catid=1:national&Itemid=559)