N4.8 Billion Investors’ Funds : Banks Should Pay Interest on Rejected Subscriptions

As the Central Bank of Nigeria (CBN) enforces strict compliance with its Capital Verification Exercise (CVE), four leading banks—Access Bank, Zenith Bank, Fidelity Bank, and FCMB—have collectively rejected N4.8 billion in investor subscriptions. The rejection stems from multiple rights applications, non-qualified shareholders, and failure to pass the CVE.

Investors who had their applications turned down are now questioning whether they will be compensated with interest for the funds held during the verification process.

The Rejected Subscriptions Breakdown

According to reports:

• Access Holdings Plc raised N351.01 billion but rejected N1.88 billion in subscriptions.
• Zenith Bank Plc raised N350.46 billion, rejecting N1.04 billion.
• FCMB Group Plc dismissed N1.47 billion worth of applications.
• Fidelity Bank Plc rejected N436.99 million in applications.

These rejections primarily occurred due to discrepancies in investor applications were held for several months during the CVE conducted by the CBN, have sparked debate over whether investors should be compensated with interest rather than having their money sit idle.

Investors Await Clarification on Refunds

While banks typically refund rejected funds, concerns are emerging over whether interest will be paid on the amounts held during the verification period. Investment Banker & Stockbroker highlighted that while application rejections are standard, delays in processing and refunding funds create unnecessary financial burdens on investors.

Similarly, MD/CEO of Investment Capital Limited, emphasized that the verification process was designed to prevent illicit financial inflows. However, the prolonged timeline raises concerns about fair treatment for investors whose funds were tied up during the review.

Will Banks Pay Interest?

While no official statement has been issued regarding interest payments on rejected funds, financial experts argue that unless explicitly stated in the offer documents, banks are unlikely to compensate investors for the time value of their money. Given the volume of rejections, pressure may mount on banks to clarify their refund policies.

With the CBN prioritizing financial system stability, investors and analysts alike will be watching closely to see if the affected banks take additional steps to address concerns over rejected funds and delayed refunds.

Investors’ Funds Tied Up for Months

Under normal circumstances, rejected funds are refunded to investors without interest. However, given the prolonged verification period, financial experts argue that investors deserve compensation for the time value of their money—just as banks charge interest on loans or delayed payments.

Investor Action: What Next?

Affected investors could demand interest payments or seek regulatory intervention to prevent future occurrences. The banking sector must ensure transparency and fairness in handling investor funds, especially during major financial exercises like recapitalization.

Mr Celestine Ukpong, an investor in the market, viewed his opinion saying the Securities and Exchange Commission (SEC) and the CBN may need to step in to establish clear guidelines on the treatment of rejected subscriptions. Investors should not be at a disadvantage for merely participating in a bank’s recapitalization process, he concluded.

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