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The biggest casualties in terms of deposit loss, should the Federal Government go ahead to implement  the court order on funds forfeiture for Bank Verification Number (BVN) non-compliant accounts, will be the first generation banks, The Nation has learnt.


These banks, according to a source who spoke anonymously, seem to have the largest number of customers that has stayed with them for close to or over 100 years. Justice Dimgba Igwe of the Federal High Court, ruling on an ex parte application filed by the Federal Government through the Office of the Attorney-General of the Federation on October 21, granted the temporary forfeiture of funds in accounts not linked to BVN within two weeks unless the owners justify their ownership of such accounts. The deadline for compliance ended yesterday.


The source said it would be very difficult to put a figure to the 46 million accounts not linked to BVN, adding that: “The first generation banks are believed to have largest number of dormant accounts, although that has not been established. These banks have the largest number of dormant accounts because of how long they have been in the business,” he said.


The source explained that some new generation banks also have large numbers of accounts, but majority of their customers are from the middle class. He said many of the customers joined the banks during or after the banking consolidation of 2005, in what is regarded in the banking industry as ‘’Flight to Safety’’.


“A lot of the members of the middle class tend to associate more with some new generation banks. So, even though the accounts are many, but they remain largely active,” the source said.

The banks with the largest impact are likely to lose deposits running into billions of naira, and that may affect their liquidity positions.


The Federal Government has secured an interim forfeiture order from Federal High Court which would now allow it to freeze the accounts of bank customers in Nigeria who have no Bank Verification Numbers.


The order obtained before Justice Dimgba gave the Federal Government the nod to instruct the banks to disclose any investments made with these funds and to freeze any outward movement from these accounts.


The court order mandates the Central Bank of Nigeria (CBN) to appoint an examiner to look into the books of any commercial bank that fails to comply. The banks are expected to provide the names of accounts without BVN, account numbers, outstanding balances, domiciliary accounts without BVN, branches/locations where these accounts are domiciled.


Source: http://www.tribuneonlineng.com/nigerian-banks-weak-capital-adequacy-fitch/


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