Representatives should prevent banks from keeping customers' reversed funds

The Central Bank of Nigeria was ordered by the House of Representatives on Tuesday to prevent commercial banks from keeping customer monies that have been reversed for longer than the time period specified by the top bank.

The resolution was passed by the House after Emmanuel Ukpong-Udo, a member representing the Ikono/Ini Federal Constituency in Akwa Ibom State, submitted a motion headed “Need to restrain commercial banks from holding funds reversal beyond the date prescribed by the Central Bank of Nigeria.”

The lawmaker referred back to a June 8, 2020, statement from the CBN outlining timelines for refund complaints and reversals. Among the timelines were those for failed “On-Us” automated teller machine transactions, which occur when customers use their cards on the bank’s ATMs. These transactions “shall be instantly reversed from the current timeline of three days,” the representative said.

He added, “Refunds for failed ‘Not-on-US’ ATM transactions (where customers use their cards on other banks’ ATMs) shall not exceed 4% hours from the current 3-5 days; where instant reversal fails due to any technical issue or system glitch, the timeline for manual reversal shall not exceed 24 hours.”

“Resolution of disputed/failed POS or web transactions shall be concluded within 72 hours from the current five days,” stressing that “All banks are directed to resolve the backlog of all ATM, POS, and web customer refunds within two weeks starting June 8, 2020.”

“The House is worried that Nigeria’s financial sector is facing serious concerns due to persistent complaints of failed customer transactions,” the legislator who spearheaded the discussion stated, noting that over 69% of complaints in July 2023 included unsuccessful transactions.

“Cognizant of the rapid increase in numbers of failed banks and the magnitude of the problem which has reached an unprecedented level and alarmed that the high rate of failed bank transactions is causing a decrease in business investments and lending across the country,” the CBN was encouraged by the House to order banks to improve their mechanisms for minimizing unsuccessful transactions that happen without the customer’s consent.

Additionally, it asked the top bank to order banks “to reverse customers’ funds within the stipulated periods whether or not the customers lodge complaints.”

Therefore, in order to “look into the issues, provide solutions, and report back to the House within four weeks for future legislative action,” the House directed the Committees on Banking Regulations, Banking and Other Ancillary Institutions, and Digital and Electronic Banking to “work with the apex bank and Nigeria Interbank Settlement System.”