LAGOS—CENTRAL Bank of Nigeria has directed banks operating in thecountry to immediately set machinery in motion to implement a Nigerianuniform bank account number standards.
The CBN which gave the financial sector a mandate of nine months to realise this, explained that the new measure was designed to enhanceFederal Government policy of automated direct credits in which paymentsare made through direct transfer to beneficiaries’ accounts in theplace of cheque payment.
Vanguard gathered that the policy which started, January 1, 2009, has led to an upsurge in the volume automated direct credits at thebankers clearing house.
The CBN said that before arriving at the decision, it consulted with three major providers of Core Banking Applications in the bankingsystem to ascertain the feasibility of a uniform account numberstandard and the feasible implementation modalities.
It said that based on the technical advice obtained, it mandated a period of nine months for full compliance by the banks, adding thatcompliance monitoring by the Payments System Policy and OversightOffice would commence six months from the release date of the document.
CBN said: “All banks are expected to submit their comprehensive migration plans to the Central Bank of Nigeria one month from therelease date herein. Any infractions to the dictates and stringenttime-lines provided in this document shall attract severe sanctions asmay be determined by the Central Bank of Nigeria from time to time.
“The Bankers Clearing House has witnessed an upsurge in the volume of automated direct credits cleared through the system since February,2009. This resulted from the directive of the Federal Government to theeffect that all Ministries, Departments and Agencies of the FederalGovernment should replace all forms of cheque payments with electronicpayments as from January 01, 2009.
“As the ACH volume increased, so have complaints of banks and bank customers resulting from the incidents of abuse of the clearing system.Such of the complaints include: delayed presentment of customers’instructions in the clearing house; delayed application of inwardautomated direct credits items by some banks; late return of un-appliedinward ACH items; application of inward ACH items to wrong accounts;bank customers quote account numbers wrongly.
“CAWG observed that many of these complaints are traceable to the non-uniform structure of bank account numbers among Nigerian banks. Forinstance most ACH beneficiaries quote their bank account numberswrongly while providing such account numbers to their employers, inpreparation 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 paymentinstructions through the Automated Clearing House.
“A uniform account number structure scheme would enable both the employer and the presenting bank to validate account numbers and thiswould greatly reduce: the volume of items returned un-applied due towrong account numbers; the incidence of posting to wrong accountnumbers, by the receiving bank; the incidence of delayed presentment ofoutward ACH items.
Presently, most banks use days to cross-check, validate and correct account numbers before presenting ACH items through the AutomatedClearing House; the incidence of delayed application of inward ACHitems.
“Most banks expend a lot of energy and time to correct account numbers before uploading inward items just because their core bankingapplications work with too long bank account numbers. We are of theopinion that if the Nigerian banking industry implements a Uniform BankAccount Number scheme, then many of the electronic payment problems wecurrently experience would be resolved and banks would experiencereduced cost of operations and increased efficiency of ACH processing”.
The CBN directive added: “In the course of our study and deliberations, CAWG discovered that Uniform Bank Account Number schemeis best practice. The proposed NUBAN is a 10-digit Bank Account Numberformat, with the following structure: 999999999 – Account Serial Number9 – A Check Digit constructed to support a modulus check, which enablesthe presenting bank to perform checks.
The Check Digit is derived from an algorithm that operates on a combination of the three-digit CBN-assigned Bank Code and thenine-digit Account Serial Number.
Customer records database
“Every bank is required to create and maintain a NUBAN code for every customer account (current, savings, etc) in its customer recordsdatabase, and the NUBAN code should be the only Account Number to beused at all interfaces with a bank customer.
We expect every bank to maintain their present Account Numbers and use them for their internal operations only as from the effective dateof NUBAN, but every such account number would have to be mapped to aNUBAN code as an Alternate Account Number.
“The bank customer should be provided with only the NUBAN code which he/she would use as a means of account identity at every interactionwith the bank. The onus lies on the bank to map such NUBAN codesupplied by the customer to the relevant internal account number withinthe bank’s technology system.
A 10-digit account number is simple and can easily be managed by bank customers. NUBAN frees bank customers from the risk of quotingaccount numbers wrongly – a risk that is higher with account numbers oflonger digits.
“The NUBAN shall be used in ACH operations. Every payer shall obtain the three-digit Bank Code and a 10-digit NUBAN code from the payeewhenever ACH payments are to be set up; the Payer’s bank shall ensurethat all payee accounts supplied by the payer conform to NUBANstandards.
The Payer shall validate the check digit of the NUBAN code of every electronic payment instruction, and only instructions with valid NUBANcodes shall be presented in the Automated Clearing House; the receiving(Payee) Bank shall upload inward ACH payments based only on the NUBANcodes of each payment instruction; such upload programme/software shallvalidate the check digit (10th digit) of the NUBAN code in the uploadprocess.
All inward items with invalid NUBAN codes shall be returned unapplied, and the receiving bank shall not make any manual effort tocorrect such records. d) The Account Number field in the MICR codelineof cheques shall contain only the NUBAN code.”
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