There are signs of increased apathy to banking services in Nigeria as the volume of currency outside the banking system as well as number of inactive bank accounts are rising, reports Bamidele Famoofo
A recent report from the Nigeria Interbank Settlement System, (NIBSS), revealed that Nigerians abandoned 10 million bank accounts in 2018. The implication being that just in one year, no banking transaction was performed in 10 million bank accounts.

According to NIBSS, the number of bank accounts abandoned by customers, considered ‘inactive bank accounts’ rose by 28 per cent to 46.7 million in 2018 from 36.7 million in 2017.
For clarity purposes, the Central Bank of Nigeria (CBN) guidelines on dormant accounts says, “an account shall become inactive if there has been no customer or depositor-initiated transaction for a period of six months after the last customer or depositor initiated transaction.”
The report further showed that in five years, inactive bank accounts grew by 73 per cent while active bank accounts grew by 35 per cent. Inactive bank accounts increased by 19.61 million from 27.09million in 2014 to 46.7 million in 2018 as against active bank accounts which rose by 24.75 million to 71.2 million in 2018 from 46.45 million in 2014.
Some reasons cited for the uncomplimentary development in the banking system by NIBSS include among others; unnecessary charges levied on customers of banks by the banks. “Most Nigerians do not like unnecessary reduction in their bank accounts and when this happens, they tend to withdraw all cash from that account and never use it for transactions”, NIBSS added.
An educational consultant and entrepreneur, Mrs. Adejumoke Obafemi, aligned with the position of NIBSS as she told THISDAY that one of the reasons why she considered moving her company’s account from one of the top three banks was the uncomplimentary handling of her banking transactions by the bank. “I believe the staffers are doing some shady deals on my account because there are times when my money is missing in my account without any debit alert and when that is only reversed many days after l lodge my complaint to them”. According to NIBSS, Some bank customers also abandon their accounts as a result of the activities of hackers while relocation was another major reason for bank dormancy. This has to do with bank customers who migrate to another country, thereby leaving their accounts inactive.
Other reasons listed by people close to the financial industry for rising Inactive bank accounts include ownership of multiple bank accounts by some bank customers, breakdown in bank-customer relationship, Biometric Verification Number (BVN) issues, incomplete account opening documentation and Know Your Customer (KYC) challenges as well as increased efforts against money laundering and other financial frauds by banks and the regulatory authorities.
Meanwhile, some economic pundits have cited economic difficulties and business failures as well as rising job losses as the major causes.
No Hassle
Economic statistics from the CBN for the fourth quarter of 2018 also recently made available for public consumption suggests that there was no dearth of funds in circulation in the review period as implied by rising inactive bank accounts.
According to the CBN, the currency in circulation at the end of December 2018 rose by 20.9 per cent to N2.329trillion compared with the growth of 1.4 per cent at the end of September 2018.
“The development relative to the preceding quarter reflected mainly the 19.4 per cent and 7.5 per cent increase in its currency outside banks and demand deposit components respectively,” the fourth quarter report of the CBN disclosed.
Total deposits at the CBN amounted to N15.7trillion at the end of December 2018, indicating a 6.5 per cent increase above the level at the end of September 2018.
The increase was attributed to 13.0 per cent and 9.5 per cent rise in the other deposits of the private sector and the federal government respectively.
Of the total deposits at the CBN, the shares of the federal government, banks and private sector deposits were 49.6 per cent, 30.6 per cent and 19.8 per cent respectively.
Reserve money rose by 4.9 per cent to N7.135trillion at the end of December 2018, compared with the increase of 7.0 per cent at the end of September 2018. The development reflected the increase in total bank reserves.
On money market development, the CBN disclosed that it was generally stable in the fourth quarter of 2018.
Liquidity was buoyed by inflow from fiscal injections, Federal Government bonds, Nigerian treasury bills and maturing CBN bills.
Outflow, such as the sale of CBN bills, FGN securities and provisioning and settlement for foreign exchange purchases, impacted market liquidity.
Overall, banks continued to access the intra- day and standing facilities window to meet their short-term liquidity needs during the review quarter.
In addition, total value of money market assets outstanding at the end of the fourth quarter of 2018 was N11.897trillion, showing an increase of 0.4 per cent, compared with 1.4 per cent increase, at the end of the third quarter of 2018.
The increase was as a result of the 12.5 per cent and 1.5 per cent increase in bankers’ acceptances and FGN bonds outstanding, respectively, during the quarter under review.
Assets and Liabilities
Meanwhile, the total assets and liabilities of commercial banks stood at N37.14trillion at the end of November 2018, representing 0.4 per cent decrease below the level at end-September 2018. According to figures obtained from the Central Bank of Nigeria, the funds were sourced, largely, from foreign liabilities; drawdown on reserves and acquisition of credit from the central bank.
The funds were used, mainly, for payment of matured demand deposits, and settlement of claims on Central Bank and Federal Government. At N19.75trillion, banks’ credit to the domestic economy, at end-November 2018 showed an increase of 2.0 per cent above the level at end-September 2018.
The development reflected the 9.0 per cent and 32.8 per cent rise in claims on the federal government and state and local governments respectively, which more than offset the decline in claims on other private sector in the review period.
Total specified liquid assets of the banks were N12.16trillion at end-November 2018, representing 56.8 per cent of the total current liabilities. At that level, the liquidity ratio was 3.0 percentage points below the level at end-September 2018, but 33.42 percentage points above the stipulated minimum ratio of 30.0 per cent.
The loans-to-deposit ratio, at 65.04 per cent, was 0.13 percentage points and 14.96 percentage points lower than the level at end-September 2018 and the prescribed maximum of 80.0 per cent, respectively.