Customers Fret Over Banks’ Handling Of Dormant Accounts

By Tony Chukwunyem

Bank customers across the country are getting increasingly concerned at what they describe as the failure of financial institutions to give them adequate notice before declaring their accounts dormant, findings by New Telegraph have shown.

According to the customers, the development has often resulted in embarrassing situations for some of them in which it was when they urgently needed funds from their bank accounts that they discovered that such accounts have been declared dormant.

A Lagos-based businessman, Mr. Paulinus Obi, said he was recently taken aback when he tried to withdraw money from one of his old accounts via an Automated Teller Machine (ATM) to fund an urgent purchase only to realise that he could not complete the transaction.

He said that it was when he went to a branch of the bank the following day that he was told that the particular account was dormant. Arguing that the bank should have informed him before the account became dormant, he said: “I frankly did not realise that there had been no transaction in that account for over a year. I just knew I had N46, 000 in the account,which I would be able to withdraw whenever I wanted to.”

It was a similar experience for Ms Patience Asuquo, who said that she stopped using a particular bank account after she relocated to another part of Lagos.

She said the hustle and bustle of city life usually made it difficult for bank customers to ensure that their accounts are active, adding that it should be part of banks’ responsibility to inform their customers when an account is about becoming dormant.

Indeed, according to guidelines issued by the Central Bank of Nigeria (CBN) in October 2015, on banks’ management of dormant accounts, the apex bank stated: “Three months to dormancy, the bank shall notify the account holder of the status of the account.

“For individual accounts that the bank cannot reach the account holder during the three (3) months period, it shall contact the next-of-kin to assist in locating the account holder(s). “This will be done within one month after the account has been declared dormant.

“For corporate accounts, the bank shall contact the directors of the entity or seek information from the Corporate Affairs Commission on the Directors.” Reacting to the complaints, a bank official, who spoke on condition of anonymity, contended that lenders already incur costs to monitor dormant accounts since they are prone to fraud and other illegal transactions.

The official said some banks do make efforts to contact owners of accounts in line with the CBN’s directive but that usually most of these customers would have either relocated to another part of town or would have stopped using the telephone number with which they used to open the account.

He said the problem of inactive and dormant accounts was persistent across many banks in the country, attributng it to people opening many accounts at a go and failing to monitor them consistently.

He also blamed the situation on poor saving culture and low level of financial literacy among Nigerians. “Some of the major reasons why there are dormant accounts in banks are because of poor/low saving culture, and low level of financial literacy among people,” he said.

According to the latest industry statistics obtained from the Nigerian Inter-Bank Settlement System (NIBSS), the number of dormant bank accounts, including corporate bodies and individuals, increased to 31 million in 2016 from 26.04 million dormant accounts as at December, 2015.

NIBSS also indicated that currently, out of the 96.22 million total account numbers, only 65.49 million or 68.06 per cent are active, with the remaining 31.94 per cent being dormant.

The CBN defines an inactive account as one that has not recorded any customer or depositor-initiated transaction for a period of six months after the last customer or depositor initiated transaction.

Similarly, the regulator defines a dormant account as one that has not recorded any customer or depositor-initiated transaction in it for a period of one year after the last customer or depositor-initiated transaction.

According to the CBN, customers are not required to provide any documentation to activate an inactive account.

“Simple deposit or withdrawal shall suffice to activate the account,” the banking watchdog stated. However, to make a dormant account active, the CBN requires the customer to provide satisfactory evidence of account ownership, means of identification and present place of residence.

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