CBN to Close Accounts Operated by Digital Banks

By Modupe Gbadeyanka

The Central Bank of Nigeria (CBN) is planning to clean up the financial system by closing all tier-1 accounts mostly operated by digital banks but have not been linked to the Bank Verification Number (BVN).

The reason for the action, according to a senior official of the apex bank, is that these entry-level accounts are being used to perpetrate fraud in the country.

In order to have more people in the financial system, some digital banks and financial technology (fintech) companies, like Opay and Palmpay, open bank accounts for customers with minimal requirements.

These accounts, known as tier-1 accounts, have a limit of N50,000 deposits and an operating balance of N200,000 and N300,000. They can be opened without the BVN and are majorly to deepen financial inclusion because they are targeted at the unbanked population.

Disturbed that some fraudsters are exploiting this loophole, the central bank has decided to remove these accounts and would work with the Nigerian Inter-Bank Settlement System (NIBSS) to achieve this.

Speaking at the Prembly Compliance Breakfast Dialogue on Thursday, the Director of the Risk Management Department and Chief Risk Officer of the CBN, Mr Blaise Ijebor, also said cybercriminals use tier-1 accounts to penetrate the banking system.

“We are doing a lot about agency banking. We are moving towards agents being able to do BVN registration which moves a lot of Tier-1 accounts to Tier-2,” he said.