CBN goes tough on Nigerian banks, announces fines for failed transaction reversals, others

The Central Bank of Nigeria has said that any failed Nigerian Instant Payment (NIP) transaction not reversed into the customer’s account within 24 hours based on complaint of the sender and/or beneficiary will attract a fine of N10,000.

The CBN, in a circular also said delayed application of inward NIP into beneficiary’s accounts beyond four minutes would attract a penalty fee of N10,000 per item.

The apex bank made this known in its ‘Circular on the regulation on instant inter-bank electronic funds transfer services in Nigeria’, issued to Deposit Money Banks, microfinance banks, and other financial institutions.

The circular, signed by Dipo Fatokun, CBN’s director of banking and payment system department, said the new regulation takes effect October 2, 2018.

The circular stated that where a sending entity erroneously sent value contrary to the customer’s instructions due to wrong account number, wrong amount, duplication among others to a receiving entity and requested the reversal in writing within 14 working days of the transaction, the receiving entity should oblige within one business day without recourse to the customer (beneficiary) of the receiving entity provided funds were available.

An automatic indemnity would be inferred against the sending entity making the reversal request, it stated. Where funds were not available, it added, the receiving entity should immediately notify its customer that the account was wrongly credited and provide proof of such notification to the sending entity.

It added that the receiving entity should notify the customer about the consequences of not funding the account within 24 hours, which included watch-listing in the banking industry, credit bureau and reporting to law enforcement agencies.

In the circular, the receiving entity would watch-list the customer if he failed to provide funds within seven days, the CBN stated.

If a customer claims to have made a transfer in error where the beneficiary is known to the complainant, the CBN said the Sending Entity shall encourage the complainant to contact the beneficiary for an amicable settlement. But where the beneficiary is not known to the complainant or a known beneficiary refused to effect a refund to the complainant, the Sending Entity having received a tenable claim from customer shall notify the Receiving Entity who shall place a lien on the amount in the account of the beneficiary and thereafter obtain the consent of the beneficiary to execute refund.

The circular explained that the Sending Entity shall mean a Nigerian company or Financial Institution licensed by the CBN to carry on the business of facilitating Electronic Funds Transfer services in Nigeria and who initiates an Instant EFT on behalf of its customers while the Receiving Entity shall mean a Nigerian company or Financial Institution licensed by the CBN to carry on the business of facilitating Electronic Funds Transfer services in Nigeria and who receives the proceeds of Instant EFT on behalf of its customer.