New Telegraph

Finance Act: Analysts predict increased reactivation of dormant accounts

As reactions continue to trail the commencement of the new Finance Act 2020, which, among other provisions, allows the Federal Government to take over unclaimed dividends in any listed company and unutilised amounts in dormant bank accounts outstanding for six years or more, analysts at CSL Stockbrokers Ltd have said that the move will lead to an increase in the number of bank customers who would want to reactivate their dormant accounts. The analysts, who stated this in a report obtained by New Telegraph yesterday, also predicted that the government’s plan would compel many people to make efforts to retrieve their unclaimed dividends.

Noting that the move was aimed at helping the government to mitigate the impact of the coronavirus (covid-19) pandemic on the country’s economy, the analysts said: “The funds realised will be placed in a trust fund, managed by the Debt Management Office (DMO).

The DMO’s responsibility also includes payment of claims for such dividend and the accompanying compensation for accrued interest.” They further stated that “while we agree with the public outcry that dividends and bank balances are private wealth of investors, either individuals or corporate entities and negates the provisions of the constitution when converted to federal wealth, we expect this policy move to benefit the fund owners as such funds (unclaimed dividends) is expected to earn interests payable to the beneficiaries instead of the previous arrangement where unclaimed dividends serve the holding firms.”

However, while stating that they expected the new law to “trigger reactivation of dormant account of many banks and force many to try to retrieve their unclaimed dividends,” the analysts said: “We are concerned about the ability of the government to manage such funds effectively considering that a lot of resources will need to be deployed.” According to data obtained from the Nigeria Interbank Settlement System (NIBSS), there were a total of 45.57 million dormant bank accounts in the country as at December 31 2019.

Similarly, data released by the Securities and Exchange Commission (SEC) shows that the total value of unclaimed dividends stood at N158.44billion as at the end of 2019. Last year, some lenders stepped up efforts to encourage their customers to reactivate their dormant accounts. For instance, Stanbic IBTC Bank PLC launched a reactivation campaign aimed at welcoming all its customers with dormant accounts “back home”. The campaign saw the lender offering incentives such as, zero charges on local transfers for one month and free debit card for Sole trader account holders to customers who reactivated their dormant accounts.

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