By Omoh Gabriel, Business Editor
LAGOSâ€”CENTRAL Bank of Nigeria has directed banks operating in the country to immediately set machinery in motion to implement a Nigerian uniform bank account number standards.
The CBN which gave the financial sector a mandate of nine months to realise this, explained that the new measure was designed to enhance Federal Government policy of automated direct credits in which payments are made through direct transfer to beneficiariesâ€™ accounts in the place of cheque payment.
Vanguard gathered that the policy which started, January 1, 2009, has led to an upsurge in the volume automated direct credits at the bankers clearing house.
The CBN said that before arriving at the decision, it consulted with three major providers of Core Banking Applications in the banking system to ascertain the feasibility of a uniform account number standard and the feasible implementation modalities.
It said that based on the technical advice obtained, it mandated a period of nine months for full compliance by the banks, adding that compliance monitoring by the Payments System Policy and Oversight Office would commence six months from the release date of the document.
CBN said: â€œAll banks are expected to submit their comprehensive migration plans to the Central Bank of Nigeria one month from the release date herein. Any infractions to the dictates and stringent time-lines provided in this document shall attract severe sanctions as may be determined by the Central Bank of Nigeria from time to time.
â€œThe Bankers Clearing House has witnessed an upsurge in the volume of automated direct credits cleared through the system since February, 2009. This resulted from the directive of the Federal Government to the effect that all Ministries, Departments and Agencies of the Federal Government should replace all forms of cheque payments with electronic payments as from January 01, 2009.
â€œAs the ACH volume increased, so have complaints of banks and bank customers resulting from the incidents of abuse of the clearing system. Such of the complaints include: delayed presentment of customersâ€™ instructions in the clearing house; delayed application of inward automated direct credits items by some banks; late return of un-applied inward ACH items; application of inward ACH items to wrong accounts; bank customers quote account numbers wrongly.
â€œCAWG observed that many of these complaints are traceable to the non-uniform structure of bank account numbers among Nigerian banks. For instance most ACH beneficiaries quote their bank account numbers wrongly while providing such account numbers to their employers, in preparation for electronic means of salary payment.
When this happens, both the employer and the presenting bank would not be able to validate such accounts before presenting such payment instructions through the Automated Clearing House.
â€œA uniform account number structure scheme would enable both the employer and the presenting bank to validate account numbers and this would greatly reduce: the volume of items returned un-applied due to wrong account numbers; the incidence of posting to wrong account numbers, by the receiving bank; the incidence of delayed presentment of outward ACH items.
Presently, most banks use days to cross-check, validate and correct account numbers before presenting ACH items through the Automated Clearing House; the incidence of delayed application of inward ACH items.
â€œMost banks expend a lot of energy and time to correct account numbers before uploading inward items just because their core banking applications work with too long bank account numbers. We are of the opinion that if the Nigerian banking industry implements a Uniform Bank Account Number scheme, then many of the electronic payment problems we currently experience would be resolved and banks would experience reduced cost of operations and increased efficiency of ACH processingâ€.
The CBN directive added: â€œIn the course of our study and deliberations, CAWG discovered that Uniform Bank Account Number scheme is best practice. The proposed NUBAN is a 10-digit Bank Account Number format, with the following structure: 999999999 – Account Serial Number 9 – A Check Digit constructed to support a modulus check, which enables the presenting bank to perform checks.
The Check Digit is derived from an algorithm that operates on a combination of the three-digit CBN-assigned Bank Code and the nine-digit Account Serial Number.
Customer records database
â€œEvery bank is required to create and maintain a NUBAN code for every customer account (current, savings, etc) in its customer records database, and the NUBAN code should be the only Account Number to be used at all interfaces with a bank customer.
We expect every bank to maintain their present Account Numbers and use them for their internal operations only as from the effective date of NUBAN, but every such account number would have to be mapped to a NUBAN code as an Alternate Account Number.
â€œThe bank customer should be provided with only the NUBAN code which he/she would use as a means of account identity at every interaction with the bank. The onus lies on the bank to map such NUBAN code supplied by the customer to the relevant internal account number within the bankâ€™s technology system.
A 10-digit account number is simple and can easily be managed by bank customers. NUBAN frees bank customers from the risk of quoting account numbers wrongly â€“ a risk that is higher with account numbers of longer digits.
â€œThe NUBAN shall be used in ACH operations. Every payer shall obtain the three-digit Bank Code and a 10-digit NUBAN code from the payee whenever ACH payments are to be set up; the Payerâ€™s bank shall ensure that all payee accounts supplied by the payer conform to NUBAN standards.
The Payer shall validate the check digit of the NUBAN code of every electronic payment instruction, and only instructions with valid NUBAN codes shall be presented in the Automated Clearing House; the receiving (Payee) Bank shall upload inward ACH payments based only on the NUBAN codes of each payment instruction; such upload programme/software shall validate the check digit (10th digit) of the NUBAN code in the upload process.
All inward items with invalid NUBAN codes shall be returned unapplied, and the receiving bank shall not make any manual effort to correct such records. d) The Account Number field in the MICR codeline of cheques shall contain only the NUBAN code.â€