CBN’s BVN Revalidation Mandate: Balancing Security and Customer Convenience

The Central Bank of Nigeria (CBN) recently issued a circular dated December 1, 2023, requiring all commercial, merchant, non-interest, payment service, banks, financial institutions, and mobile money operators to electronically revalidate their National Identity Numbers (NIN) or Bank Verification Numbers (BVN) linked to their accounts and wallets by January 31, 2024. Funded accounts without a BVN or NIN will stop accepting new deposits on March 1, 2024, and will be placed in a “Post No Debit or Credit” state.

This decision from the CBN affects millions of bank accounts as the deadline for connecting accounts to a BVN or NIN is drawing near. In contrast to 5% of banked persons who lack a BVN or NIN, 52% of unbanked adults have the NIN, according to a recent research by Enhancing Financial Innovation and Access (EFInA). 133.5 million of Nigeria’s 191.4 million bank accounts are currently in operation as of 2021, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).

There is hope among experts that the CBN would not revoke this instruction. This is because, in March, the CBN confirmed that the BVN, which was issued in partnership with the NIBSS, is perpetual, unlike claims that have been circulating that imply it has a 10-year validity term.

According to NIBSS statistics, as of December 18, 2023, there are 59.96 million BVNs in the banking sector. According to the EFInA research, the percentage of people using banks, non-banks, and informal channels for financial management increased from 10% in 2020 to 20% in 2023.

A month after the circular was issued, research found that numerous bank branches needed to comply with the instructions. A few bank representatives said that clients were unaware of the situation, implying that there would probably have been a hurry to comply if they had known.

While Sterling Bank’s customer experience officer stated that most accounts are already connected to a BVN, a UBA bank officer observed a rise in clients visiting branches around markets to link existing accounts to a BVN. Asserting the need to update customer profiles per the new CBN regulations, Alert Group Group CEO Olanrewaju Kazeem warned that accounts without a BVN or NIN beyond the deadline would be subject to limitations. In addition to stressing the possibility of limited access for accounts that need to comply, Rasheed Bolarinwa, head of the Association of Corporate and Marketing Communications Professionals in Banks, recommended quick compliance.

In addition to announcing an impending BVN and NIN audit with possible penalties for violations, the CBN has urged compliance officials to get acquainted with guidance notes. The EFInA study indicates an increasing trend in the use of financial services, with rises in credit (4%), remittances (8%), and savings (2%), all of which contribute to improved financial inclusion. Nigerians’ use of digital financial services has increased dramatically over the previous year, from 34% in 2020 to 45% in the current year.