TUESDAY, 31 AUGUST 2010 FROM MATHIAS OKWE

 

Banks have been given nine months to adopt a uniform account numbering system or face stiff sanctions.The Central Bank of Nigeria (CBN), which gave the directive said the Bankers Clearing House has witnessed an upsurge in the volume of ACH (automated direct credits) cleared through the system since February 2009, resulting from the Federal Government order that all Ministries, Departments and Agencies (MDAs) should replace all forms of cheque payments with electronic ones as from January 1, 2009.

 

Already, banks have been mandated to immediately furnish the CBN with their compliance plan while monitoring by it will start six months from August 18, the date of the issuance of the circular.The circular reads in part : “ Sequel to consultations with relevant stakeholders including three major providers of core banking applications to the Nigerian banking system, we hereby mandate a period of nine months for full compliance by the Deposit Money Banks. Compliance monitoring by the Payments System Policy and Oversight Office will commence six months from the release date of this document. All DMBs are expected to submit their comprehensive migration plans to the Central Bank of Nigeria one month from the release date herein.

 

“Any infractions to the dictates and stringent timelines provided in this document shall attract severe sanctions as may be determined by the Central Bank of Nigeria from time to time.“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.’’

 

The apex bank further explained that the move was initiated because 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 some of the 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; bank customers quote account numbers wrongly.

 

It was observed that many of these complaints are traceable to the non-uniform structure of bank account numbers among Nigerian banks.For instance, it said 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.

 

The apex bank declared that a uniform account number structure scheme would enable both the employer and the presenting bank to validate account numbers and this 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; and the incidence of delayed presentment of outward ACH items.

 

The circular shed more light on the challenges besetting the current accounts numbering system: “ Presently, most banks use days to cross-check, validate and correct account numbers before presenting ACH items through the Automated Clearing House;    the incidence of delayed application of inward ACH items; most banks expend a lot of energy and time to correct account numbers before uploading inward items just because their core banking applications work with too long bank account numbers. It is hoped that the implementation of a Uniform Bank Account Number scheme, then many of the electronic payment problems we currently experience would be resolved and banks would experience reduced cost of operations and increased efficiency of ACH processing.’’

 

It contended that the uniform account numbering system was in line with global best practice, citing for instance, the UK Payments Council published ‘Industry Best Practice for Financial Institutions: Account Number Formats’ on June 20, 2009. UK banks are required to implement the scheme.

 

Source:Guardian