CBN Orders Banks To Return Failed Transfers Within 10 Minutes

The Central Bank of Nigeria (CBN) has released stiff regulations that would henceforth make it compulsory for deposit money banks and other financial service providers in the country to return failed transactions into the account of its customer under the Electronic Funds Transfer (EFT) within 10 minutes or face severe sanctions.

The new regulation covers Instant Electronic Funds Transfer Services in Nigeria on various payment channels and any payment platform that seeks to provide Instant Electronic Funds Transfer Services in Nigeria.

Under the new policy tagged: ‘Regulation on Instant (inter-bank) Electronic Funds Transfer Services in Nigeria,’ a sending entity (a bank who initiates an Instant EFT on behalf of its customers must ensure that EFT messages contain the sender’s name, BVN and account number, beneficiary name and account number, narration and other information specified by customers at the point of initiating a transfer, to aid reconciliation.

Under the new regulation, CBN said the sending bank must “refund into customer’s account full proceeds of failed transactions returned by the receiving entity within 10minutes; refund into customer’s account full proceeds of transaction which the sending entity is unable to process within one hour after the next settlement closure.”

The effective date of the regulation is October 2, 2018.

The apex bank also directed the financial institutions to publicise instant EFT services and the instant EFT FAQ to its customers, receive customer complaints regarding EFT problems, and pursue resolution to a logical conclusion, in line with the dispute resolution in clause 10 of the approved guidelines that were posted on the bank’s website.

Sanctions

If the apex bank is serious on its statements, then, the affected stakeholders, including Deposit Money Banks, other Financial Institutions (OFIs) i.e licensed primary mortgage banks, microfinance banks and mobile money transfer operators and instant ETF service providers would either sit up or brace up To for the CBN’s sledgehammer.

According to the new guideline, a failed NIP transaction not reversed into customer’s account within 24 hours based on complaints of sender and/ or beneficiary attracts a fine of N10,000.00 per item. Also, delayed application of inward NIP into beneficiary’s accounts beyond four minutes based on complaints of sender and/ or beneficiary would attract a N10,000.00 sanction per item.

Role of a receiving entity

Among other requirements, the receiving entity – financial institution licensed by the CBN to carry on the business of facilitating Electronic Funds Transfer services in Nigeria are asked to provide Name Enquiry support to EFT Service Provider to minimise instances of wrong credits, subject to a Non-Disclosure Agreement, which shall limit the usage to provision of Instant EFT services only; “Apply Instant EFT proceeds to the customer’s account within 60 seconds ensure that Instant EFT proceeds have been credited to customer’s account before confirming to the Sending Entity that transaction was successful,” the bank said.

Customers’ rights/responsibilities

On the flip side, bank customers involved in electronic transfers are demanded to provide accurate beneficiary account details for every EFT instruction.

In a situation where they experience problems arising from EFT transactions, “promptly to the sending/receiving entity,” the regulatory authority said, adding, “whenever a credit has been erroneously applied to the customer’s account with the receiving entity, the customer shall promptly notify the receiving entity and authorise the reversal of such erroneous credit.”

CBN said where the customer account was unfunded, the customer shall provide funds within 24 hours, failure to provide funds shall be a ground for watch-listing of the customer in the banking industry, credit bureau and reporting to law enforcement agencies.