The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) tried to convince the House of Representatives Committee on Banking and Currency that they would use the proceeds of dormant accounts in commercial banks judiciously.
The two organisations spoke during the public hearing on a bill for an Act to Amend the Banks and other Financial Institutions Act, to among other things, establish a Deposit Fund at the CBN, for Standardisation and Management of Dormant Accounts.,
Kofo Alada, who represented the CBN said the amendment should give the the apex bank ‘certain latitudes’ to manage the Dormant accounts fund.
According to him, the accrued funds into the dormant accounts would be used to finance infrastructure and also assist CBN in effectively discharging its duties as lender of last resort to the deposit banks and other financial institutions.
The provisions of the bill, he said, should not be restricted to deposit banks but also extended to specialized banks that accept deposits.
Some depositors, he said are in prison hence their accounts hence were declared dormant, and that accounts that became dormant because of liquidation were not covered by the bill.
However, Belema Taribo, Board Secretary /Director (Legal) of the Nigerian Insurance Deposit Corporation (NDIC), said management of the dormant account should be given to the Corporation by the Green Chamber.
According to him, the fund would be justifiably used as it will be invested in government securities as provided in the NDIC Act.
Unclaimed funds, he said should be redrafted in the bill to include: “process of local and foreign currency, drafts or any instruments not yet presented for payment by beneficiaries or funds received from may person without sufficient details as to the rightful beneficiary, judgement debt for which judgement creditor has not claimed the amount of judgement award.”
Taribo said despite the introduction of Treasury Single Account (TSA), there are several dormant accounts belonging to Government’s agencies and parastatals, adding that insider abuse is negatively affecting the banking industry.
He also called for inclusion of dormant accounts of government agencies in the bill but that accounts under litigation should not be included in the pool of dormant funds.
He urged the National Assembly to make laws banning the accessibility to loans by bank owners or directors from their own banks.
Chairman of the Committee Jones Onyeriere was unhappy at the lack of financial regulation from the apex bank on commercial banks.
He said: “I’m worried to the extent that if you look at the BOFI Act amendment bill, you will agree with me that most banks create unnecessary infractions. How will you ask a bank to pay N100,000 for an infraction, that is why the bank can afford to give themselves billions of credit facility at the expense of the depositors.
“With respect to the regulator’s, there’s nothing weighty about the consequences of not doing your job as it were because why would you have the banking supervision department and you know that the law provides that no shareholder or bank director will give credit to himself or anybody whosoever related to him or her in excess of N50,000 but you are giving billions of naira.
“CBN, you know that no bank has the authority to give any loan whatsoever without the express approval of the CBN and you allow that to happen.
“So the time has come to take critical look at the BOFI Act and trust me, in the next two to three months, we will come out with the amendment, enough is enough,” he said.