The number of dormant bank accounts in Nigeria has surged to 19.69 million, raising concerns about financial inclusion and customer engagement within the banking sector. This increase comes as the Central Bank of Nigeria (CBN) continues to implement various monetary policies aimed at stabilizing the economy and improving banking operations.
What Are Dormant Accounts?
Dormant accounts refer to bank accounts that have remained inactive for a prolonged period, typically six months to two years, depending on the bank’s policies. Once an account is classified as dormant, restrictions are placed on transactions to prevent fraudulent activities, and reactivation requires identity verification by the account holder.
Factors Contributing to the Rise in Dormant Accounts
Several reasons have been identified as contributing to the rise in inactive bank accounts across Nigeria:
Economic Hardship: Many Nigerians struggle with inflation, job losses, and a high cost of living, making it difficult for them to maintain active bank transactions.
Multiple Bank Accounts: Some individuals open multiple accounts across different banks but fail to maintain activity in all of them, leading to dormancy.
Banking Policies: Changes in bank charges, restrictions on certain accounts, and regulatory requirements sometimes discourage customers from using their accounts regularly.
Increased Digital Banking Adoption: Many Nigerians are shifting towards fintech platforms and mobile money services, reducing the need for traditional bank accounts.
Unclaimed Funds of Deceased Customers: Accounts belonging to deceased individuals often remain inactive due to difficulties in accessing funds by their beneficiaries.
CBN’s Response and Policies
The Central Bank of Nigeria has introduced several policies to manage dormant accounts and ensure proper handling of unclaimed funds. Some of these measures include:
Dormant Account Guidelines: The CBN has mandated banks to transfer funds from accounts that remain dormant for more than 10 years into a special “Unclaimed Balances Trust Fund.”
Customer Reactivation Initiatives: Banks have been urged to simplify the reactivation process by allowing digital verifications and reducing documentation requirements.
Awareness Campaigns: Financial institutions have been engaging in public sensitization efforts to encourage customers to maintain regular activity in their accounts.
Implications for the Banking Sector
The rise in dormant accounts poses both challenges and opportunities for the Nigerian banking system:
Reduced Liquidity for Banks: Inactive funds do not generate transaction revenue for banks, affecting their profitability.
Risk of Financial Fraud: Dormant accounts are vulnerable to cyber threats and fraudulent activities if not properly monitored.
Financial Inclusion Concerns: The trend highlights gaps in banking accessibility and the need for improved engagement strategies.
Potential for Policy Adjustments: The CBN may consider further reforms to encourage customers to keep their accounts active and prevent funds from lying idle.
The Way Forward
To address this growing issue, banks and regulatory bodies need to take proactive steps, such as enhancing customer engagement, introducing flexible account maintenance policies, and leveraging technology to simplify banking services.
Financial literacy campaigns, improved customer service, and incentives for account usage could also help reduce the number of dormant accounts and promote a more active and inclusive banking system in Nigeria.
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Written By Fortune Davidson