Difference between dormant and inactive bank accounts in Nigeria


The Central Bank of Nigeria in its clarification of issues with the disproportionate treatment of dormant accounts by deposit-taking financial institutions stated the difference between dormant and inactive accounts.


The CBN circular said, “It is in view of the above and the imperative to promote transparency in the financial system that the CBN hereby issues these guidelines to provide a standard for the treatment and management of dormant account balances in Nigeria.


“The purpose of the policy is to curb possible abuse in the operation of dormant accounts, set operational standards for banks and other financial institutions in line with best practice, and to reinforce the property rights as guaranteed in the 1999 Constitution of the Federal Republic of Nigeria (as amended).


A dormant account shall be a bank account that has no customer or depositor originated transaction within a specified period of six years after the last customer or depositor initiated a transaction. However, such an account shall be recognised as inactive after the first six months of non-depositor or customer originated transaction in it.


“Accounts shall retain their interest earning status during the period of dormancy in the bank. Deposit-taking financial institutions shall continue to monitor accounts that show tendencies of inactivity and where necessary, initiate actions for their activation or protection from wrong usage.


“Once dormant accounts exceed a six-year period, they shall be reported to the CBN along with efforts made by the obligor bank to locate the owners or their personal representatives.”


With the new policy, three months before the end of the six years, the account holder and any next-of-kin have to be notified and the revalidation of inactive/dormant accounts wil not attract any charge to the account holder.

“Dormant account balances shall continue to be reflected in the books of banks as deposit liabilities until they are eventually withdrawn by the account holders or disposed of on their instructions. Dormant account balances shall, therefore, be regarded as deposits and shall be covered by deposit insurance.

“In the case of government-owned inactive/dormant accounts, banks shall notify the relevant government agency of their existence, with periodic returns of such notification sent to Banking Supervision Department. Banks are also required to turn over the funds to the concerned treasury after six years of inactivity.


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