A staggering 19.69 million bank accounts in Nigeria now lie dormant, a figure revealed by the Nigeria Inter-Bank Settlement System (NIBSS) data, raising significant questions about financial inclusion and the efficacy of customer retention strategies. This surge, documented in monthly tracking throughout 2024, has prompted the Central Bank of Nigeria (CBN) to intensify its regulatory oversight, demanding greater transparency from financial institutions.
The CBN’s directive, requiring banks to publish details of dormant accounts, aims to return unclaimed funds to their rightful owners. But, as I consider the sheer volume of these inactive accounts, I can’t help but wonder about the individual stories behind each one. What unforeseen circumstances led to these accounts being left untouched?
“With respect to dormant accounts, what I found personally is if you leave accounts dormant in banks, sometimes more than when you don’t leave them dormant in banks. In fact, most times, they are more susceptible to fraudsters copying your identity and trying to gain hold of the system to grab your money. So, that is a problem I think most money banks face,” stated CBN Governor Olayemi Cardoso, emphasising the vulnerability of these funds.
The NIBSS data paints a stark picture: dormant accounts consistently exceeded 19 million throughout 2024, peaking at 20.57 million in May and June. While the CBN’s July directive led to a temporary decrease, the numbers have since fluctuated upwards, with December closing at 19,697,125 inactive accounts. This represents a 6.51% increase from January’s 18,492,169.
The CBN’s guidelines, outlined in a circular signed by Michael Akuka, mandate that banks publish details such as account names, types, and branch locations on their websites. This move, while aimed at transparency, also raises critical questions about data privacy, though the CBN has cited the Nigeria Data Protection Act and the Banks and Other Financial Institutions Act to justify its approach.
“Information to be published on banks’ websites, as well as the association’s website (where applicable), shall include the name of the account, the type of account, the name of the bank, and the branch where the account is domiciled ONLY,” reads the CBN circular, attempting to balance transparency with privacy concerns.
Read Also: CBN Digital Finance Inclusion, Cardoso Economic Policy, Nigeria Recapitalization
Furthermore, the CBN plans to consolidate dormant accounts and unclaimed balances held for over 10 years into an “Unclaimed Balances Trust Fund Pool Account,” potentially investing these funds in treasury bills and government securities. Former Minister of Finance, Zainab Ahmed, estimated that this fund could accumulate as much as N850 billion.
While the rise in active accounts, from 209.31 million in January to 311.65 million in December, signifies robust banking activity, the persistent issue of dormant and closed accounts—which reached 25.48 million in December—underscores the need for financial institutions to reassess their strategies.
The implications are clear: banks must enhance their customer engagement to prevent accounts from falling into inactivity. This involves not only improving communication but also understanding the underlying reasons for dormancy. Are these accounts left behind due to economic hardship, lack of access, or simply oversight?
The CBN’s move to centralise these funds aims to protect them from fraud and ensure they are returned to their rightful owners. However, the long-term impact on public trust and financial inclusion remains to be seen. As we navigate this complex landscape, it is essential to consider both the economic and human dimensions of these dormant accounts.
