Commercial banks in Nigeria are once again coming under another liquidity pressure following recent moves by the Senate to mop up an estimated N3trillion from dormant bank accounts belonging to the dead as well as the living customers. Besides the dormant accounts, an estimated N100billion in unclaimed dividends being held back by companies operating at the secondary level of the capital market is also targeted for mop up.
The bill which passed through first reading on the Senate floor is titled “Dormant Accounts Bill, 2016”. It is sponsored by Senator Ovie Omo-Agege [APC, Delta Central]. The bill prescribes N10m fine besides other sanctions against any account provider (i.e. bank) that fails to comply with a demand notice as may be prescribed by the board established to manage the fund. Chief executives of commercial banks who feel threatened by the bill are aggressively lobbying to kill or at least water down its provisions.
Bill sponsor Senator Omo-Agege said “the owners of an estimated N3trn sitting in these dormant accounts don’t even know these funds are still there”. Yet, the banks treat these funds as if they are theirs. Omo-Agege said in civilized climes such funds, after 10 years of dormancy, become bona vacantia and they revert to the government. This, according to him, is what obtains in the US, UK and other parts of the developed world but Nigerian banks treat the funds as theirs and would not even allow the public to know how much is held in them.
Under the proposed law, these dormant funds are to be pooled into a fund for use by government to build and maintain infrastructure, including roads and power. The proposed bill seeks to harness these funds and keep them in a dedicated account at the Central Bank of Nigeria, CBN. When the bill is eventually passed into law, a board shall be set up to manage and disburse the funds to critical areas of infrastructural deficit. The proposed board shall access these funds from CBN and disburse same to agencies such as Federal Emergency Roads Management Agency (FERMA). The funds can also be used to support the power sector.
When holders of bank accounts decide not to operate an account again, they most often fail to approach their banks because the process of closing an account could cost more than the small amount left in it. The minimum amount left by account holders is usually so meager that many of them feel it is not worth going after. This is so with many Nigerians who may have, for this or other reasons, abandoned bank accounts without officially writing to the banks to close them. The same reason may account for the failure by many shareholders to collect and cash their dividend warrants.
While we commend the Senate for making this bill to pass the first reading, we urge it to give it accelerated hearing and conclude all legislative actions on it so that it could be passed into law and assented to by the President. Nigeria at this critical period of economic recession needs every kobo that is lying idle in dormant accounts in the banks. Before the funds are mopped, the banks should first remind holders of the affected accounts through adverts in newspapers or other platforms to activate their accounts if they so wish. This could also prevent litigation that may arise from the mopping of monies in dormant accounts. The proposed bill clarifies that if owners of the mopped up funds ever show up, their principal will be paid to them in addition to a 1.5 percent annual interest.
We urge government to appoint only credible persons as members of the board proposed in the bill. We also suggest that the board should be ad-hoc in nature so that it could be dissolved as soon as the funds from the accounts have fully been utilised. The board could be reconstituted anytime that funds in dormant bank accounts again accumulate.
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