ABUJA, NIGERIA – Tokunbo Martins, director, Other Financial Institutions (OFIs) supervision department of CBN, said in a circular that the Central Bank of Nigeria (CBN) has extended the deadline for Bank Verification Number (BVN) registration for customers of Other Financial Institutions (OFIs) from July 31, 2007 to December 31, 2017. Other financial institutions include microfinance banks (MFBs), mortgage banks and finance companies. Consequently, effective January 1, 2018, all customers without BVN linked to their account will no longer be titled to debit operations.
The CBN had in a letter dated April 21, 2017, directed OFIs to enrol their customers on before July 31, 2017, conspicuously display notices sensitising customers on BVN in the banking hall, ensure that all new customers have BVN and forward to director of OFIs supervision department the schedule of customers’ accounts with BVN on August 7, 2017.
The letter also stated that effective August 1, 2017 customers of OFIs without BVN linked to their account shall not be allowed to withdraw from those accounts.
The deadline expired on July 31, 2017 and many OFIs were found in breach of the regulatory directive. Consequently, following appeals received from financial inclusion secretariat, the National Association of Microfinance Banks (NAMB), and members of Mortgage Bankers’ Association of Nigeria (MBAN) soliciting for a shift in the deadline to support better compliance and avoid further financial exclusion, the CBN decided to extend the deadline.
The various challenges encountered in the early stage of deployment of the joint CBN/NIBSS support to members of NAMB have also informed management decision says the CBN. The CBN stressed that OFIs are required to ensure that all customers are enrolled on the BVN platform utilising appropriate Know Your Customers (KYC) requirement.
July 31 Deadline: CBN Extends BVN Enrollment To Microfinance Banks, Primary Mortgage Institutions.
The Central Bank of Nigeria (CBN) has extended the Bank Verification Number (BVN) exercise to microfinance banks.This was disclosed in a circular dated April 21 with reference number OFI/DIR/CIR/GEN/17/139 and signed by the CBN Director in charge of Other Financial Institutions Supervision Department, Mrs Tokunbo Martins.
The apex bank gave July 31, 2017 as deadline for this exercise, warning that any account not linked with the BVN would be “shall not be allowed to make withdrawals.”
In the circular titled ‘Letter to all Other Financial Institution (OFIs): Bank Verification Number (BVN) enrolment for customers,’ the CBN explained that the move became necessary because of the “absence of a unique identifier in the Nigerian banking industry,” describing this as a “major challenge inhibiting the effectiveness of the Know Your Customer (KYC) principle.”
“To address this challenge and complement the existing means of identification of customers, which include: the Driver’s License; the International Passport; the National Identity Card; and the Permanent Voter’s Card; the CBN, in collaboration with the Bankers’ Committee, launched the Bank Verification Number (BVN) Project in February 2014. The BVN is expected to also minimize the incidence of fraud and money laundering in the financial system, as well as enhance financial inclusion.
“The implementation of the BVN initiative, which started with the customers of Deposit Money Banks (DMBs), has been very successful.
“However, to avoid a broken identification link in the banking system, it has become necessary to extend the BVN enrolment to the customers of Other Financial Institutions (OFIs) especially as some OFIs are located in the rural areas of the country, and have customers that may not have enrolled with the DMBs.”
OFIs include microfinance banks, Primary Mortgage Institutions (PMI) and others.
CBN pointed out that the “BVN enrolment will support the achievement of the zero default credit targets set for the Participating Financial Institutions (PFIs) in the Micro Small and Medium Enterprises Development Fund (MSMEDF).”
It added that this exercise will “open opportunities for credit to millions of Nigerians without a standard means of identification.”
In the circular, the banking industry watchdog said OFIs are required to enrol their customers on or before July 31, 2017; conspicuously display notices sensitizing customers on BVN in the banking hall; ensure that all new customers have BVN; and forward to the Director, Other Financial Institutions Supervision Department schedule of customer accounts with BVN on August 7, 2017.
“Effective August 1, 2017, all customers without BVN linked to their account shall not be allowed to make withdrawals from those accounts,” Mrs Martins said.
She emphasised that the CBN “will monitor compliance with the requirements of this circular, and defaulters will be appropriately sanctioned,” warning them to be “guided accordingly.”
You would recall that recently, the Minister of Finance, Mrs Kemi Adeosun, had in a correspondence to the CBN Governor, Mr Godwin Emefiele, noted that the introduction of the BVN has immensely improved the integrity of the Federal Government payroll, from which more than 50,000 ghost workers had been detected.
However, the Minister lamented that operating bank accounts in MFBs without requirement for BVN had left a huge loophole for those who hide and launder proceeds of crime to escape detection by law enforcement agencies.
According to her, “Our ongoing efforts to verify the integrity of Federal Government personnel costs and purge the system of fraud and error has made extensive use of the BVN as a means of identifying recipients of multiple salaries, and salaries paid into accounts with names that differ from those held on our payroll records.
“The success of this effort has to date yielded the removal of over 50,000 payroll entries.”