The Central Bank of Nigeria (CBN) has succumbed to several calls by the Federal Government, Nigerians and experts in the financial institutions in the country, as it has extended the Bank Verification Number (BVN) exercise to microfinance banks.
In a circular issued and dated April 21 with reference number OFI/DIR/CIR/GEN/17/139, the apex bank gave July 31, 2017 as deadline for the exercise, warning that any account not linked with the BVN “shall not be allowed to make withdrawals.”
The circular was signed by the CBN Director in charge of Other Financial Institutions Supervision Department, Mrs Tokunbo Martins, Business Post reports.
In the circular titled ‘Letter to all Other Financial Institution (OFIs): Bank Verification Number (BVN) enrolment for customers,’ the CBN explained that the move became necessary because of the “absence of a unique identifier in the Nigerian banking industry,” describing this as a “major challenge inhibiting the effectiveness of the Know Your Customer (KYC) principle.”
“To address this challenge and complement the existing means of identification of customers, which include: the Driver’s License; the International Passport; the National Identity Card; and the Permanent Voter’s Card; the CBN, in collaboration with the Bankers’ Committee, launched the Bank Verification Number (BVN) Project in February 2014.
“The BVN is expected to also minimize the incidence of fraud and money laundering in the financial system, as well as enhance financial inclusion.
“The implementation of the BVN initiative, which started with the customers of Deposit Money Banks (DMBs), has been very successful.
“However, to avoid a broken identification link in the banking system, it has become necessary to extend the BVN enrolment to the customers of Other Financial Institutions (OFIs) especially as some OFIs are located in the rural areas of the country, and have customers that may not have enrolled with the DMBs.”
OFIs include microfinance banks, Primary Mortgage Institutions (PMI) and others.
“Effective August 1, 2017, all customers without BVN linked to their account shall not be allowed to make withdrawals from those accounts,” Mrs Martins said.