The Central Bank of Nigeria CBN has classified bank account inactivity into 2 categories:
- Inactive accounts and
- Dormant accounts
We will be reviewing the classifications and explaing how accounts in these states are treated as recommended by the Apex bank.
First, what is a Dormant Bank Account?
A Dormant Bank Account is a bank account that has not witnessed any customer induced or deposit transaction for a period of 1 year. Customer induced transactions refer to transactions done deliberately by the customer and does not include transactions like interest paid by Banks on interest bearing accounts or charged such as Account Maintenance Charges AMC, Loan related charges and others.
A Dormant Bank Account according to Investopedia, is a bank account that “has had no activity for a long period of time, other than posting interest. A statute of limitations usually does not apply to dormant accounts, meaning that funds can be claimed by the owner or beneficiary at any time…”
To make a Dormant Bank Account active again however, the bank customer or account holder will be required to provide satisfactory evidence of account ownership, which will also include acceptable means of identification and utility bill of place of residence. This is to confirm the present place of residence if he has moved or change address.
On the flip side of Dormant Bank Account is the Inactive Bank Account – An Inactive Bank Account is an account that has not witnessed any customer or depositor induced transaction for a period of 6 months. This categories of account will not require any form of documentation to make active again, other than simple deposit or transfer of cash of any amount into the account.
Here are the 7 things that should happens to your bank account during the periods of inactivity or dormancy.
- All interest-bearing accounts like savings accounts, fixed deposit accounts and call accounts are all expected to retain their interest earning status during the period of dormancy. That means that your account in any of these categories will continue to earn the statutory or agreed interest on it no matter how long it remains inactive or dormant. Banks may however change the interest rate on such interest-bearing accounts to allign with current market rates
- The cost of monitoring and reaching out to customers to reactivate inactive or dormant account via SMS, email, phone calls or physical visitation are to be born by banks. The bank customers whose accounts are dormant or inactive are not to bear the cost associated with getting them to reactivate such accounts because banks are the major beneficiaries of the reactivated accounts to. Charges like SMS on cash or transfer deposits are not part of this however.
- Banks are to continue to monitor and protect all dormant and inactive accounts against wrong usage. Just like all other bank accounts. It is part of the responsibilities of the banks to ensure customers account with them are protected from both internal and external abuse. Because of the inactivity status of both dormant and inactive accounts, fraudsters, assisted by unscrupulous bank workers tend to take advantage of such inactivity to perpetuate fraud with such accounts. It is part of the banks responsibilities to ensure such accounts are protected from abusive uses.
- Banks are under obligation to report status of dormant accounts and efforts made to locate the owners of such accounts and their next of kin or representatives to CBN on a quarterly basis. The Nigerian bank regulator CBN, has also mandated banks in Nigeria to report the status of all dormant account at regular intervals. The report will also include efforts made to reach out to the account owners to reactivate such accounts.
- Part of the mandatory actions the bank mist take to reactivate a dormant account especially for individual accounts, is to reach out to the next of kin after its inability to locate the account holder within a month after 3 months of dormancy. While for corporate accounts, banks are expected to contact the directors or seek information from the Corporate Affairs Commission (CAC) on the directors of the company.
- There is no charges associated with reactivation of dormant account. So banks are not expected to charge their customer or account owner for a reactivated dormant account. The real reason for this is that banks are assumed to have had ample use of the idle funds during the period of dormancy.
- Any finally, banks are expected to maintain proper records of all dormant and inactive accounts irrespective of the number of years of dormancy and reactivate such accounts once the bona-fide account holder or his or her legitimate representative request that the account be reactivated.