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How the CBN’s New Bank Payment Rules Could Affect You

On the 13th of September, the Central Bank of Nigeria (CBN) introduced new rules for interbank electronic fund transfers. These rules, which are to take effect from the 2nd of October, are aimed at curbing the widespread problems with electronic fund transfers which banks and their problems frequently encounter.

The issues covered by the new rules include banks’ failure to revert funds to their customers’ accounts when transfer transactions fail; customers or banks transferring money to the wrong accounts; and persons not returning funds after their accounts have been wrongly credited with. That’s a good fraction of the troubles you get with the banking transactions you do through mobile apps, USSD codes, ATMs and that difficult teller at your local bank. The new guidelines should help grant us some relief from these troubles.

If you’re interested in looking up the rules yourself, they’re contained in the circular published on the CBN’s website on September 14. Here we’ll give you a simplified rundown of these rules, and explain what they mean for you.

Some scenarios covered by the new regulations

  1. When banks make wrong transfers

A bank teller might type in the wrong digits while on the job. The result could be that there’s more money (or less) being transferred into your intended recipient’s account than you filled in your slip; or worse, the money could wind up in the account of a total stranger.

Current realities suggest that the erring teller could face a big fine or lose their job, especially if the bank is unable to recover the money. The new rules mean that they’re more likely to get the money back, and thus, less likely to face heavy consequences for this mistake. And maybe they could have it all sorted out before you know it ever happened.

The CBN now says that your bank can request the reversal of any wrongly executed transaction it has conducted on your behalf, from the recipient’s bank, and expect to get the funds returned within 14 working days of the transaction. The receiving bank can return the funds to your bank without informing the recipient, and your account will be re-credited with the funds.

However, the person who wrongly receives the funds your bank transfers from your account might take the money out before their bank gets notified of the error. In this case, their bank will inform them that they’ve received the money in error, and request that they return it. If they fail to do this in seven days, their BVN (Bank Verification Number) will be added to the banking industry’s watch list, and they’ll be reported to security agencies.

  1. When customer errors lead to wrong transfers

What happens if it’s you who transfers the wrong amount of money, or mistakenly send funds to an account you never intended to get it?

According to the CBN’s regulations, your options depend on whether you know the recipient, and if he or she is willing to refund without being pressed to do so. Of course, there’s the small matter of the banks deciding whether you did make an error with the transfer, but the guidelines assume that your bank accepts your claim.

If you know the recipient, you’ll be encouraged to settle the matter with them. But if you don’t know who the recipient is, or if he or she refuses to refund the money, you’re expected to report back to your bank about this. They’ll notify the recipient’s bank to request the refund from their customer. Both banks could also help mediate for a settlement between you and the other person. But if this too fails, your bank will take the radical option: they’ll place the recipient’s BVN on the banking industry’s watch list and report them to security agencies.

  1. When a transfer fails

You’ve almost certainly experienced the “hanging money” problem. Someone transfers some money to you; they call you up to tell you they’ve sent it to you, but your account doesn’t show it. Or it could be you who sends the money and doesn’t receive confirmation that it’s been received by its intended recipient.

What happens in cases like this is that the bank does receive the transferred value, but doesn’t “apply” it to your account (or the account you sent it to). This might happen when they have problems with their internal systems.

The new rule says that if banks don’t credit their customers’ accounts within 4 minutes of receiving a transfer, a fine of ₦10,000 will be exacted from them. The same fine also applies for money not returned to the customer’s account when a transfer fails (due to ‘network’ errors, for example), within 24 hours of this failure.

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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