Nigeria: Protecting Families of Deceased Bank Customers

There is urgent need for a legislation to ensure easy access to accounts of the deceased by their families

The Central Bank of Nigeria (CBN) recently released draft guidelines on the management of dormant accounts, unclaimed balances and other financial assets in banks and other financial institutions in Nigeria. It proposed that banks should transfer funds in accounts that have been dormant for up to 10 years into a trust fund account. The aim is for the apex bank to mop up about N500 billion in unclaimed balances considered dormant in over 59.7 million bank accounts across the country. According to the proposal, banks would have to transfer funds in accounts that have been dormant for up to 10 years into a trust fund account.

By its definition, a dormant bank account is one that has no customer or depositor-initiated transaction for a period of six months. Since dead people cannot operate their accounts, it stands to reason that such accounts would be dormant. And because of that, relatives of many dead bank depositors or account holders go through harrowing experiences trying to access the money left in the accounts held by their deceased ones. Therefore, whatever may be the motivation of the CBN’s move to mop up dormant funds in banks, it is necessary to point out that there are no laws restricting the banks from providing Pay on Death (POD) service to a willing client.

Over the years, Nigerian banks have been renowned for mounting several roadblocks to frustrate survivors of deceased account holders. To access such funds in bank accounts, probate or letter of administration are required. Probate will be required where a deceased died testate (leaving a will), while letter of administration is required where the deceased person died intestate (without a will). Whichever way, survivors of dead bank depositors do not find it funny accessing the funds left by their deceased ones. It is more difficult for poor people.

With stringent conditions that banks demand of deceased depositors’ survivors, the financial sector has continued to record more dormant accounts. For inexplicable reasons, many families have complained of difficulty in securing letters of administration and even when they obtain one, banks often list other conditions that are difficult to meet. With millions of survivors made to forgo funds in the bank accounts held by their loved ones, the amount of unclaimed funds in commercial banks is estimated to be about N1.3 trillion.

We believe that the increasing advocacy for a legislation to mandate banks to provide Pay on Death (PoD) form to every account holder is not only timely but necessary and urgent. With such legislation, it is expected that banks will be required to contact beneficiaries named by account holders in their PoD before or when such accounts go dormant and transfer the funds to them. This will mitigate the hardship that many families and beneficiaries of deceased account holders face in procuring letters of administration.