The Federal High Court in Abuja on Friday affirmed the legality of the Nigeria Inter-Bank Settlement System Plc (NIBSS) in managing the Bank Verification Number (BVN) database nationwide, ruling that the operation aligns fully with the Central Bank of Nigeria (CBN) Act and other relevant banking laws.
Justice James Omotosho delivered the judgment in a case involving NIBSS, the CBN, and the Incorporated Trustees of Digital Rights Lawyers Initiative (DRLI), among others. The case was initiated by NIBSS through its lead counsel, Wolemi Esan, SAN, seeking to clarify its statutory mandate and protect its authority to maintain the BVN system.
NIBSS had approached the court to obtain a restraining order preventing any Nigerian institution from disputing its legal right to oversee the BVN database. The company also sought a declaration that its management of BVN data does not violate Nigerians’ constitutional right to privacy or any extant law.
“An order of perpetual injunction restraining the 1st Defendant (Digital Rights Lawyers Initiative), and any other entity from contesting the plaintiff’s statutory authority to maintain and manage the BVN database,” the court filings read.
Background of the Legal Dispute
NIBSS, which is responsible for developing and regulating an integrated nationwide network for electronic and paperless payments, accused the Digital Rights Lawyers Initiative of repeatedly filing lawsuits sometimes through proxies challenging its authority to manage the BVN system. The plaintiffs argued that NIBSS’s control of the BVN infringed on constitutional privacy rights.
In response, CBN’s lead counsel, Kofo Abdulsalam-Alada, submitted a counter-affidavit asserting that NIBSS’s management of the BVN is fully authorized by law and essential for financial security.
“The management of the BVN is statutorily authorized, constitutionally justified, and critical for maintaining the stability and security of Nigeria’s financial system,” Abdulsalam-Alada told the court.
He emphasized that the CBN’s powers to regulate and develop payment systems, including the BVN, are grounded in the Central Bank of Nigeria Act (2007) and the Banks and Other Financial Institutions Act (2020). Specifically, Section 47(2) of the CBN Act empowers the apex bank to develop payment and settlement systems within Nigeria.
Court’s Verdict
Justice Omotosho ruled decisively in favour of NIBSS, stating that the powers of the CBN to regulate financial institutions are firmly established in Nigerian law, including the Banks and Other Financial Institutions Act (BOFIA) 2020.
“The BVN does not constitute a breach of anyone’s fundamental right to privacy,” the judge affirmed.
He granted all reliefs sought by NIBSS, declaring that:
- NIBSS is empowered by law to maintain and manage the BVN database.
- The management of the BVN does not violate privacy rights in Nigeria.
- The Digital Rights Lawyers Initiative and any other entity are restrained from challenging NIBSS’s authority over the BVN.
Justice Omotosho clarified that this judgment is in rem, meaning it upholds a right against the entire world, unless overturned on appeal.
Why This Matters
This ruling settles longstanding legal uncertainties around NIBSS’s authority to manage the BVN, a critical tool for verifying individual bank accounts across Nigeria’s financial sector.
The BVN is a unique identification number issued to every bank customer at enrollment, linking all of their bank accounts across the country. It is essential for fraud prevention, identity verification, and enhancing the security of financial transactions.
The judgment provides NIBSS with strong legal backing as it continues to oversee this vital infrastructure amid increasing litigations challenging its mandate.
