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HIGHLIGHT ON THE CENTRAL BANK’S REGULATION ON INSTANT (INTER-BANK) ELECTRONIC FUNDS TRANSFERS IN NIGERIA

By Victor Chikezie  The Central Bank of Nigeria on the 13th of September 2018 introduced a Regulation for Instant Electronic Transfer Funds (EFT) Services in Nigeria. The new regulation titled: ‘Regulations on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria’ was issued to all deposit money banks, microfinance banks, mobile money operators and other financial institutions; with the aim of regulating all Instant EFT services on various payment channels in Nigeria. The Regulation makes provision for Responsibilities of a Sending and Receiving Entity in an EFT, stipulates stiff sanctions for non-compliance, and also provides for Dispute Resolution mechanisms to aid the effective implementation of the rules contained therein. The major highlights of the Regulation are as follows: The Regulation prohibits Sending Entities from providing Instant Electronic Fund Transfer Services to anyone who does not have a bank account in Nigeria. In line with its objective of promoting sound financial systems in Nigeria, the CBN under this Regulation mandates Sending Entities to ensure that EFT messages contain the sender’s name, BVN and Account number, beneficiary’s name, account number and narration information specified by the Customer at the point of initiating the transfer, to aid reconciliation.   It provides further that where an EFT fails, the Sending Entity shall refund into the Customer’s account full proceeds returned by the Receiving Entity within 10 minutes of receiving same.   The Regulation states that where a sending entity erroneously sends a value contrary to the Customer’s instruction to a receiving entity and requests the reversal in writing within 14 working days of the transaction, the Receiving Entity should oblige within one business day without recourse to the Customer who benefitted from the erroneous transaction provided the funds are available in the wrongly credited Customer’s account.   Where the funds are no longer available in the Customer’s account, the Receiving Entity should immediately notify its Customer that the account was wrongly credited and provide proof of such notification to the Sending Entity. Furthermore, the Receiving Entity is to notify the Customer about the consequences of not funding the account within 24 hours, which includes sanctions such as watch-listing, credit bureau, and reporting the Customer to the law enforcement agencies.   The Regulation also makes provisions for situations where a transfer is made in error by the Customer. Where the beneficiary is known to the complainant, the apex Bank and the Sending Entity shall encourage the complainant (in this case the Customer who made the erroneous transfer) to contact the beneficiary in an amicable manner for a refund. However, where the beneficiary is unknown to the complainant, the Sending Entity having received a tenable complaint from a Customer shall notify the Receiving Entity. Upon notification, the Regulation provides that the Receiving Entity shall place a lien on the amount in the account of the beneficiary and thereafter obtain the consent of the beneficiary to execute a refund.   Again, the Regulation provides that a failed NIP Transaction not reversed into a Customer’s account within 24 hours (based on a complaint from a sender and/or a beneficiary) would attract a sanction of N10, 000 per item. Also, […]