Monday, May 23, 2011

Banks rush to beat CBN’s deadline on NUBAN

BANKS in the country have embarked on frenetic moves to beat Central Bank of Nigeria’s (CBN’s) June deadline for them to convert

to 10-digit Nigerian Uniform Bank Account Number (NUBAN).

The apex bank had set June deadline for banks to comply with the new directive, stating that only instruments, papers and electronic, that carry NUBAN codes and pass the NUBAN validation test would be allowed in the automated clearing system as from that date.

Investigations by the Nigerian Tribune showed that 16 out of 24 banks have so far complied, while others confirmed they would meet up with the deadline.

A staff member of the corporate communication unit in one of the banks that are yet to comply, who craved for anonymity, told the Nigerian Tribune, in a telephone interview, that conversion to NUBAN was the least of the problems of the bank, stressing that the management of the bank was currently more concerned about the partners.
He said the bank would meet the deadline, adding that the migration process was not cumbersome.

“Conversion to uniform account number is not a big issue not a big issue with us. We are more concerned with our future,” he said.

Though, the CBN did not stipulate the sanction for non-compliance, it, however, said any infraction by any bank to the dictates and the stringent timelines provided in the circular sent to banks would attract severe sanctions as may be determined from time to time.

Analysts believe that the introduction of NUBAN in the banking industry would promote best practice in the account number scheme and also eliminate many of the problems associated with the Automated Clearing House (ACH), as well as the electronic payment system generally.

It will be recalled that the banking watchdog had in a circular posted on its website on July 14, last year, which emanated from the banking and payments system department, stated that with effect from June this year, the 13-digit account number will be replaced with a new 10-digit account number.

It observed that as the ACH volume increased, so have complaints of banks and bank customers resulting from the incidents of abuse of the clearing system.

It listed such complaints to include delayed presentment of customers’ instructions in the clearing house; delayed application of inward ACH items by some banks; late return of unapplied inward ACH items; application of inward ACH items to wrong accounts, and bank customers’ quote account numbers wrongly.

The apex bank maintained that the Cheques Payments and ACH Working Group (CAWG) observed that many of these complaints were traceable to the non-uniform structure of bank account numbers among Nigerian banks, citing an example with a situation where most ACH beneficiaries quote their bank account numbers wrongly while providing such account numbers to their employers, in preparation for electronic means of salary payment.

“When this happens, both the employer and the presenting bank would not be able to validate such accounts before presenting such payment instructions through the ACH. This informs the introduction of NUBAN by the CBN.”

CBN further said the 10-digit NUBAN would make Nigeria fully complaint with the 10-digit Account Number structure required by the West Africa Monetary Institute (WAMI) towards the economic integration of ECOWAS countries.

“Every bank is required to create and maintain a NUBAN code for every customer account (current, savings, etc) in its customer records database, and the NUBAN code should be the only account number to be used at all interfaces with a bank customer. We expect every bank to maintain their present account numbers and use them for their internal operations only as from the effective date of NUBAN, but every such account number would have to be mapped to a NUBAN code as an Alternate Account Number.”

It directed banks to provide customers with only the NUBAN code, which he or she would use as a means of account identity at every interaction with the bank, adding that the onus lay on the bank to map such NUBAN code supplied by the customer to the relevant internal account number within the bank’s technology system.

The apex bank stated that there were enormous benefits in the policy, such as enabling both the employer and the presenting bank to validate account numbers which would greatly reduce the volume of items returned unapplied due to wrong account numbers; the incidence of posting to wrong account numbers, by the receiving bank; the incidence of delayed presentment of outward ACH items, adding that a 10-digit account number is simple and can easily be managed by bank customers.

“ACH’s volume is growing rapidly at the moment and we have reason to believe that more volume will come in the coming months, so we need to ensure that the ACH payment system is operated efficiently and with minimal abuse by everyone along the ACH value chain, within the shortest time possible. This is the only way the current momentum of electronic payment adoption could be sustained and increased, to the overall benefit of the Nigerian economy,” the statement added.

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