Nigeria:CBN Moves to Eliminate Inefficiency in Payment System
As part of efforts to enhance the efficiency of the payment system, the Central Bank of Nigeria (CBN) has introduced an electronic reference (e-Reference) portal for the industry.
The solution is also expected to fast-track account opening processes of Nigerian banks. The central bank said the policy takes immediate effect.
The e-Reference system is a web based automated document management system, designed to process customer account references, and is capable of eliminating the inefficiencies characteristic of the old ways of manual reference processing system.
A circular signed by the Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, and posted on the regulator’s website explained that the implementation of the solution would ensure that interbank references become faster, more efficient and traceable, by both the presenting and receiving banks.
Furthermore, it said the system was designed to enhance the compliance with the existing Know-Your-Customer (KYC) directives.
The e-Reference portal, which is hosted by the Nigeria Interbank Settlement System (NIBSS) Plc, requires that receiving banks respond to inward references within three working days.
The CBN explained: “The financial services sector in Nigeria has passed through many phases of development within the last decade, as a result of CBN’s active development and supervisory initiatives to evolve a stronger and more dynamic banking system.
“Despite all the efforts, only an insignificant percentage of the more than 140 million Nigerians are currently banked. This is alarming and grossly unimpressive, considering the need for effective monitoring and control of, as well as, planning the economy by both the government and the CBN.”
Continuing, it noted that beside high illiteracy level and low confidence in the financial system, a major reason for the relatively small number of account holders was the interbank reference bottleneck which it said makes it difficult for new accounts to be opened speedily.
“At times, the prospective bank customers get frustrated and eventually abandon the process of opening a bank account.
“The NIBSS in fulfillment of her shared service mandate and in conjunction with the Committee of Heads of Bank Operations (CHBO) has agreed to develop an e-Reference portal, such that account opening processes of Nigerian banks can be fast-tracked with regards to interbank referencing,” it added.