The National Bank of Ethiopia (NBE) issued a directive to execute article 52 of the 2008 Banking Business Proclamation No. 592/2008 that enforce banks to transfer dormant account of liabilities to the central bank.
The directive titled ‘Management of Unclaimed Liabilities of a Bank Directive’ indicated that a bank shall transfer the unclaimed liability, which are dormant for 15 years and more, starting from five birr to NBE with all supporting documents.
Before the transfer of the liability banks should have taken several measures to address the claimant.
The directive article 4, sub article 4.1, indicated that a bank shall publish a notice of unclaimed liability within one year from the date it becomes unclaimed. It added that the notice shall be open for 90 days in order to communicate with the owner via different communication methods including phone, message and mail. The bank is also expected to communicate via newspaper notice that should be published for three consecutive weeks, on a weekly basis. Furthermore banks shall post it in their respective bank websites and branches that hold the unclaimed liability.
Sub article 4.2 of the directive stated that, “If the claimant does not show up within 90 days from the final date of publication of the notice, the bank shall transfer the unclaimed liability starting from five birr to NBE.”
Banks shall have full responsibility to supply any information of the claimant whose unclaimed liability has been transferred to the National Bank, including during claims after transfer to NBE. In addition, they shall provide public access to all information related to the unclaimed liabilities transferred to NBE on their website for 10 years.
Regarding interest of unclaimed liabilities sub article 5.1 stated that prior to making the transfer to NBE, a bank shall capitalize interest for the first 15 years on the unclaimed liabilities as per the pre signed agreement.
Article six sub article two stated that NBE shall open ‘unclaimed liabilities account’ for crediting unclaimed liabilities transferred by banks.
The same article in sub article 3 allowed claimants of the transferred liabilities to NBE account to be accessed from the central bank without interest.
“Upon presenting of a claim and fulfillment of required evidences, the National Bank shall pay the balance transferred to it to the rightful claimant, but no interest shall be paid on such claims,” sub article 6.3 reads.
Article six, sub article 6.6 indicated that NBE may loan the fund transferred to it and not claimed by rightful person to deposit in various insurance funds using different modalities deemed appropriate.
A bank which fails to comply with the provisions of this directive shall be penalized in accordance with article 58 sub article 7 of the banking business proclamation.
Banking Business Proclamation No. 592/2008 article 58, sub article 7 stated that any person who contravenes or obstructs the provisions of this proclamation or regulations or directives issued to implement this Proclamation shall be punished with a fine up to 10,000 birr and with an imprisonment of up to three years.
The same proclamation, article 52 with its five sub articles talks about unclaimed liabilities. The 12 year old proclamation article 52, sub article one for instance stated that a bank holding any account of liabilities which have not been claimed, the principal balance of which has not increased or decreased, for which pass-book or other records have not been presented or any correspondence has not been made, for 15 consecutive years shall transfer the fund in such account to the National Bank.
Meanwhile the proclamation had been issued over a decade ago but the required legal frame work that allows exercise of the directive was not in effect for over 12 years.
The latest directive signed by Yinager Dessie, Governor of NBE, has become effective as of August 24, 2020.