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The facts and fiction of bank accounts upgrading

By Akoma Chinweoke
Banks in the country last week witnessed unusual turnout of customers  who stormed nearest bank branches to beat the deadline for updating their accounts in compliance with the Central Bank of Nigeria’s directive. The CBN had last year given bank customers up to December 31, 2010 update their accounts, but owing to low compliance, the date was shifted to January 31, 2011.


The apex bank also warned that  “non- compliant account holders would not be permitted to operate the accounts at the expiration of the deadline as  no further extension of the deadline will be granted.

Sunday Vanguard Business Spoke to some financial experts  on the development
Banks should be able to exercise discretion – Johnson Chukwu, managing director, Cowry Asset Management Ltd.

The bank account upgrading that went on between December 1and January 31, initially most customers did not believe or see the need for them to go on-time to participate in the exercise. The exercise formerly supposed to have ended on December 31, 2010 and towards the end of that month, a lot of customers rushed to their banks which created  long queues at the banks and when the time was extended, most customers did not follow through to make sure that their accounts were upgraded early enough .

So, towards the end of the new deadline, there was another rush and stampede in the banking halls as the customers now realised that the time was about to expire and that they needed to upgrade their accounts. So, basically it is the approach we have in Nigeria where we always respond to events towards the end of the time line and that’s why we had that condition because, ordinarily, we should have expected that two months was long enough for customers to go and do business on their accounts.

But I think one of the things that the CBN wanted to do was to actually determine the number of accounts that were still alive . A couple of them may have been opened several years back and the account holders may have died, forgotten the accounts, and move on with life .

So, one of the things the CBN wanted to achieve was to separate the active accounts from those that are completely of no value and therefore delete them from the system . You would observe that in a lot of instances the account holders may have moved their residence.

So, CBN wanted them to come to the bank and actually indicate their new residence so that as part of Know Your Customers (KYC), the banks would actually know where their customers reside. So one of the things they require is that if an account is opened more than five years ago where none of the parameters has changed , the signatories, location of the account were still the same and the account is active, there was no need to demand that such account should be upgraded.

Those that should be upgraded are those that have been there for long and some of the parameters particularly their means of identity  has changed so that the banks would be up to date in their Know Your Customer rules. In terms of awareness, for bank customers, the awareness was a little bit high as anybody who had an interface with his bankers within the period of the account update should have come across the knowledge that he or she was expected to upgrade his or her accounts.

However, I don’t think those who failed to upgrade would have the operation of accounts suspended as threatened by the CBN as I am still waiting to see how that would workout as, I am sure the banks would not want to suspend accounts. But if it is an inactive account, the banks should require for re-validation of all the account opening information.

So, I don’t think it would be just sufficient for them to say we are going to close down the accounts because some of them, the owners, may not have been around for the period of the re- validation. There are still instances where owners of banks accounts were not well informed as they may be residing in the rural locations and did not come to urban locations to access the accounts in that period.  Such cases should  be treated on a case by case basis and where there is justification to exclude the client for not coming on time, the banks should be able to exercise that discretion.

Banks should have been given more period of notice before implementation.- Yemisi Shyllon, investment consultant

The upgrading of account would enable the banks to know the accounts of those who are genuine customers so that the banks would not be helping in the transaction of businesses in contravention of CBN regulations. So the exercise is a way of cleaning up the system to make sure that existing accounts in banks are real and  not abstract.

I think so far the banks are doing everything possible to make sure that customers regularize their accounts but we are still waiting to see the outcome of the exercise. The whole essence of the exercise is to restore sanity in the banking system as you cannot boast of transparency in the system without knowing your customers.

However, I think the banks should have used the radio more effectively as a medium of creating awareness on the importance of the exercise because many do not watch television neither do they read newspapers as they lack that habit of reading. Also the banks should have given the exercise more period of notice before its eventual implementation.

Account upgrading should be an  on-going process-Nze Ananyi, financial planner, Generally, in the upgrading of accounts, the key word is Know your Customer.

So, banks are expected to build a reliable database that would enable them reasonably identify and know the nature of businesses being conducted by their customers so that in the customer banking relationship, it would improve, first of all, the banks marketing strategy and also make it very clear for quantitative analysis if banks were to classify their customers using any criteria that would suit them.

I think what the central issue was that given the on- going  reform in the country’s banking sector and the perception of bankers , there was need for them to have reliable and current update of who and who are banking with them . Yes the deadline has come and gone but that does not stop anybody who feels like changing his data with the bank to advice the bank  appropriately. It is an on-going process.

The deadline was fixed so that banks would have captured reasonable number of customers current data. The whole essence was to ensure that within the period of the exercise, any responsible account holder in any bank would have found the time to visit his bank for account upgrading . So, I believe that if you are in a relationship and there is a regulatory instruction, you should comply.
It is laudable thing but… – Kyari A Bukar, managing director, ValuCard Nigeria Plc.

I was out of the country when these things happened but if the banks were supposed to update their customers information, they should be doing so continuously, because a customer’s passport could expire and if that happens, then he uses his international passport to open his account.

The bank then should have something in its data base that should say that one of the documents he had given to them for opening his account was expiring and therefore they need to update it anyway . That’s what happens in other parts of the world. But there are things like the National ID which would not change because if I use my National ID to open my account then even if the bank want to update it, I don’t know how they would update it because it is current and does not expire.

In all honesty,  I thought these are things the banks could ordinarily have done anyway but I believe the CBN felt,  may be the banks are operating accounts that do not have the information of the customers up-to-date and therefore this might give room for manipulations either by the customer or by some unscrupulous persons within the banking system. So I think it is a laudable exercise to have an updated current information about bank customers . However if the exercise was  publicized extensively, every bank accounts holder in Nigeria should have been aware of it. The other thing is, if I were a bank in operation, what I would do was, go through my data base.

Out of the million customers, may be, half of them would have documents that need updating, then I just reach out to those half and within the stipulated time i would have reached out to everybody because that’s what some of the banks did, until such a time that all of these date would be available. Some even sent the form to their customers electronically.

So there was a scramble . My concern is that if it is not well publicized, why is it that we don’t just pay attention until the last minute.  So we need to change our people’s behaviour so that we respond to these sort of things because I think the long term effect of it is that it would sanitize the system such that abuses would be stamped out as the effect of having an account that does not have an updated information is that it might portend danger .


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.