Banking Sector Undergoes Transformation: Nigerian Banks Take Action, Closing 2.021 Million Accounts in Q1’24 Amid BVN, NIN Compliance Drive
In a concerted effort to ensure regulatory compliance and enhance transparency within the banking sector, Nigerian commercial banks embarked on a significant overhaul during the first quarter of 2024 (Q1’24), resulting in the closure of over 2 million bank accounts. This strategic move comes as banks strive to align with regulatory directives mandating the linkage of bank accounts to both the National Identity Number (NIN) and the Biometric Verification Number (BVN).
The decision to close these accounts reflects a proactive approach by banks to streamline their operations, strengthen customer data integrity, and mitigate potential risks associated with non-compliance. A report released by the Nigerian Interbank Settlement System (NIBSS) sheds light on the rationale behind this sweeping cleanup, citing the need to eliminate questionable accounts and uphold regulatory standards.
Notably, the NIBSS report highlights a concerning trend of growing inactivity among bank accounts, with the number of inactive accounts witnessing a month-on-month increase of four million or 2.0%, reaching a total of 19.7 million in March 2024, up from 19.3 million in February. An account is classified as inactive when it records zero transactions, including deposits, withdrawals, transfers, or point-of-sale transactions, for a period of six months.
Despite this surge in inactive accounts, there is a silver lining, as the report also underscores a positive uptick in active bank accounts, which grew by 6.62 million or 3.0% to reach a total of 219.64 million in March 2024, compared to 213.02 million in February. This growth in active accounts signals resilience within the banking sector and reflects continued engagement and participation from customers.
The regulatory landscape driving these changes was set in motion by the Central Bank of Nigeria (CBN), which issued a directive in December 2023 instructing all commercial banks to restrict tier-1 accounts lacking proper BVN and NIN linkage by Thursday, March 1st, 2024. This directive underscores the CBN’s commitment to enhancing regulatory compliance, strengthening the integrity of the financial system, and safeguarding customer interests.
As the banking sector navigates this period of transformation, stakeholders are closely monitoring the impact of these regulatory interventions on various aspects of the industry, including stability, efficiency, and customer satisfaction. The concerted efforts of banks to align with regulatory requirements and enhance operational robustness reflect a shared commitment to fostering a resilient and transparent banking ecosystem in Nigeria.
CBN
