By BABAJIDE KOMOLAFE

More than 50 million Nigerians do not have access to financial services.   They are the financially excluded. Most of them according to a 2012 study by EFInA are women, rural dwellers, farmers and illiterates.

They do not use any financial service or product to manage their finances. They transact using cash. This is because most of them do not have one of the critical requirements to access financial services, which is ownership of a bank account.

Prior to 18th of January last year, the requirement for owning a bank account was heavily skewed against most of the people classified as financially excluded. You need a valid identification, which must be driver’s licence or international passport or National Identity card.

You must bring utility bill as proof of residential address, then you must be literate enough to complete the account opening documentations and be able to speak English that the bank staff can understand. Thus, a gateman, or fisherman that spends most of his time on the waters, who is not literate and who most likely do not have a valid identity card, would find it herculean to own a bank account.

In fact most of these people are even scared to approach banks to own a bank account. Some believe it is only for the educated and the elite, and some are intimidated by the posh ambiance and surroundings of a banking hall. “It is not for people like me”, they conclude in their minds.

In an effort to correct this impression and change this trend, the Central Bank of Nigeria (CBN), on 18th of January last year, introduced what is called the Tiered Know Your Customer (Tiered KYC).

It created three types of bank accounts with different requirements for ownership, and limit of transactions that can be carried out with each account.

“The main objective of the approach is to promote and deepen financial inclusion, by making account opening and operation more attractive and appealing to the masses”, said Barrister, Obot Udofia, Deputy Director, CBN. To achieve this, the apex bank created the Low Value Account, Medium Value Account, and the High Value Account.

Low Level Accounts

The Low Value Account (LVA) is a savings account, targeted at those who do not have valid means of identification. The requirement for opening this account is very simple and thus accessible to anybody irrespective of level of literacy and socio-economic status.

This account can be opened at branches of financial institutions (banks, microfinance banks, mortgage bank) by the prospective customer or through banking agents. This means, the prospective customer does not need to visit the bank to open the account.

The account can be opened by providing: Passport photograph; Name, place and date of birth; and Gender, address, telephone number, etc. The customer however, does not need to provide documentary evidence of the information and the bank does not need to verify the information. Furthermore no amount is required to open this type of account.

But the customer cannot deposit more than N20, 000 at a time, and the balance in the account must not be more than N200, 000 at anytime. Furthermore, where the account is linked to mobile phone, and thus used for mobile money purposes, the maximum transaction limit allowed is N3, 000 with a daily limit of N30, 000

This is to ensure that the account is not abused or used for money laundering. More so, the Low Value Account is designed for people who are usually low income and are also daily income earners. Thus, while the account can be used for ATM transactions, it can only be operated in Nigeria, and cannot be used for international funds transfer. Also, third parties can only make deposits into the account but cannot withdraw from it. Withdrawal is limited to the owner of the account.

Medium Value Accounts

Like the LVA, the Medium Value Account (MVA) is a strictly savings account. Also the physical presence of the prospective customer is not compulsory for account opening. The major difference is that, the information supplied by the prospective customer must be supported with valid means of identification and must be verified by the CBN.

According to the Tiered KYC guidelines, “The MVA accounts can be opened at any branch of a bank by agents on behalf of   enterprises for mass payroll purposes or by the account holder; It can be contracted by phone or at the banking institution website; Account opening can be conducted face-to-face (directly) at bank branches and by banking agents;     No amount is required for opening of the accounts.

“Basic customer information required are, passport photograph, name, place and date of birth, gender, address, etc. These may be uploaded offsite or submitted on-site in banks’ branches or agents’ offices.

Customer information obtained (name, place and date of birth, gender, address) are to be verified against similar information contained in the official data-bases [e.g. National Identity Management Commission (NIMC), Independent National Electoral Commission (INEC) Voters Register, Federal Road Safety Commission (FSRC)].   It is subject to further ID verification and monitoring by financial institutions.

“Where the account is linked to a mobile phone, the maximum transaction limit is N10, 000 per time, while the daily limit is N100, 000. They can be used for funds transfers within Nigeria only. Maximum single deposit is N50, 000 while the maximum cumulative balance of N400, 000 is allowed at any time. Where cross-checking of client’s ID information is not completed at the point of account opening,withdrawalshould be denied.

High Value Account

High Value Account (HVA) is for people who can meet all the documentation required to open a normal bank account. Unlike the Low and Medium Value Accounts, the account cannot be opened at a bank agent or by a bank agent on behalf of the customer. The account can only be opened by the prospective customer, and he must be physically present to do so. These accounts could be both savings and current. No amount is required for opening of accounts.