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Broker blames CBN for high number of dormant account

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By Michael Eboh

….Commends SEC’s handling of unclaimed dividends

Following its negative impact on the nation’s financial system, an expert in the Nigerian capital market, Mr. Amaeze Olisaemeka, has blamed the Central Bank of Nigeria (CBN)for the high number of dormant accounts and the numerous irregularities associated with it.

Olisaemeka, who is the General Manager, Apex Securities Limited, also commended the Securities and Exchange Commission (SEC) for its effort at ensuring transparency in the management of unclaimed dividends and for its commitment to bringing about its reduction in the capital market.

According to him, the CBN should take a cue from SEC’s management of unclaimed dividends, by making the banks publish details of dormant accounts in their coffers on a regular basis, while serious efforts are being made to address the irregularities in such accounts.

He said, “There are lot of dormant accounts in the banks these days, and I see it as a failure of regulation on the part of the CBN. The CBN is supposed to have issued a guideline mandating banks to publish details of accounts in their custody that are dormant.

“There are many people who have died and their relatives or dependants are not aware that they own accounts in certain banks. It is a known fact that these banks will never tell the relatives of the deceased that their benefactors have certain amount of money in their accounts with them. This is because the banks are using the money, it is like free fund that has no interest attached to it, they are making use of  the money to run the banks. This accounts for the high incidence of dormant accounts.”

He tasked the CBN on the need to ensure transparency in the management of dormant accounts as this will help in bringing about its reduction.
“There should be a definite rule or directive from CBN, mandating the banks to publish details of dormant accounts with them on periodic basis. Just as SEC has mandated registrars to publish details of unclaimed dividends, so that people can see and react appropriately, the CBN should do the equivalent, directing the banks to publish such information for the benefit of Nigerians,” he noted.

He commended the authorities in the Nigerian capital market for the introduction of electronic payment of dividend (e- dividend), noting that it will go a long way in ensuring sanity in the capital market and in checking the rise of unclaimed dividends.

“The introduction of electronic payment of dividends is a step in the right direction. It is important to note that the authorities have made efforts in time past to reduce the incidence of unclaimed dividends. I am aware that initially, shareholders were required to sign their signatures on dividend warrant before it can be presented. Due to the fact that most of the registrars were using it as an excuse to return dividend warrants, making sure they are not paid.

“When SEC discovered that, it came up with a regulation, discontinuing the practice of signature on dividend warrants before they are accepted. It is along this line that SEC came up with the issue of electronic payment of dividends, ensuring that the accounts of shareholders are credited in their designated banks, immediately the dividend is declared by the company.

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