Fresh anxiety over BVN as banks protest new CBN threats

By JOHN JACOBS OLUSOLA

A recent October 17, 2017 High Court judgment in Abuja, FCT, requiring the freezing of all over 40 million customer accounts that do not have bank verification numbers (BVNs) has unsettled several deposit money institutions (DMBs) as the implications of the order may begin to have severe consequences for bank liquidity. Indeed with several banks struggling with growing non-performing loans (NPL’s) beyond the statutory threshold of 5 per cent, the added burden of disappearing retail deposits could drag the sector into a financial tailspin according to analysts.

A published report by the CBN shows that at least 46 million accounts are yet to obtain bank verification numbers three year after the exercise began. Business Hallmark investigations reveal that for eign and local bank customers have begun to pile increasing pressure on the central bank to get the registration deadline extended.

In a telephone interview with the Director General of Lagos Chambers of Commerce and Industry, Mr Muda Yusuf, he was quick to take side with the government, saying that, when the government says it would freeze accounts, what it means is a clear cut plan which is targeted at different components of deposits with banks. By this, is meant that there are standard and legitimate accounts while there are others which are illegal. The illegal accounts Yusuf notes are those the government intends to seize, according to Yusuf,’ with the current enthusiasm of government, those ill-gotten monies will be recovered and put back in the treasury’.

Speaking on cash liquidity and how it could affect banks in respect to lack of adequate funds to trade with, Yusuf cautioned that one should not make a mole out of this in that the accounts in question, i.e. without BVN is not worth anything in terms of monetary value compared to what would be left behind as owned by customers with BVN. He further queries, “How much is the money we are talking about?” Besides, the CBN has a monetary policy system to deal with any likely liquidity and by extension, stabilise the 19 commercial banks that are mostly affected. In this case, Mr Yusuf was likely not aware of the number of bank customers yet without BVN, which the CBN puts at 46 million. Senior Special Assistant to the President on Prosecution, OkoiIbono-Obla recently said that the number of accounts yet to be linked through BVN was embarrassing. This fact sharply contrasts the opinion of Yusuf who believed that even if the government seized all accounts without BVN, it would be nothing compared to the accounts still operational in banks.

Figures available to Business Hallmark show that two thirds of total bank accounts in Nigeria have no BVN. Meanwhile, 26 million of this total is considered dormant. Only one out of every five adult Nigerian has a bank account, which means that a total of 60 million Nigerians are without accounts.

Rising criticisms from a variety of quarters have since trailed the federal government’s decision to seize accounts that do not have BVN numbers; while some say analysts have described the measure as drastic and stringent, others have described it as fair especially given the repeated extensions of the deadline date. Among the many critics of the government’s policy is a human rights activist and lawyer, Barrister Ebun-Olu-Adegboruwa, who has taken to social media where he has criticized the government.  In two titles relating to the BVN/ forfeiture issue He titled one, “Illegal Forfeiture of Bank Accounts”, and the other, “Interim Order of Forfeiture of Money in All Banks Is Illegal ”

According to Adegboruwa , ‘I am very well concerned about how we deploy interim orders for permanent purposes, such as to forfeit valuable assets, without any or fair hearing from the person(s) concerned.”  He further noted that it was improper to obtain interim orders to freeze bank accounts of estates that are in dispute between the beneficiaries, if estates of deceased persons are still being contested.

Adegoruwa posed two salient questions, first, ‘do they have locus on the various banks’ accounts that they want to forfeit, to which they are not signatories or have any interest?’ and second, ‘Section 6 of the Constitution creates our courts to resolve disputes. So, what is the dispute in this matter and between whom?’

As the issue continues to simmer in the public space a growing number of bank customers have written to their local banks to regularize their accounts and provide BVN numbers top avoid having such accounts seized by the Central Bank, especially as regards bank accounts owned by Nigerians in the diaspora.