Business Issues News Politics

CBN Warns Banks, FX Dealers Against Rejecting Lower Dollar Denominations and Old Bills

CBN Warns Banks, FX Dealers Against Rejecting Lower Dollar Denominations and Old Bills

The Central Bank of Nigeria (CBN) has issued a warning to Deposit Money Banks (DMBs) and authorized forex dealers, advising them against rejecting old and lower denomination dollar bills from customers. This directive follows numerous complaints from customers after the CBN conducted consumer market intelligence.

In a circular dated June 27, 2024, signed by Solaja Mohammed Olayemi, the acting director of the CBN’s currency operations department, the bank reiterated its stance: “Kindly be reminded that the Central Bank of Nigeria (CBN) circular referenced COD/DIR/INT/CIR/001/002 and dated 9th April 2021, which explicitly frowned at this selective acceptance of deposits, is still in force and must be adhered to and complied with by all relevant parties.”

The CBN instructed all banks and authorized FX dealers to accept both old series and lower denominations of U.S. dollars that are legal tender for deposit from their customers. The financial regulator warned that sanctions would be imposed on any bank or authorized forex dealer who refuses to accept old series or lower denomination dollars from their customers.

Earlier Warnings from CBN

In 2021, the CBN had issued directives to forex dealers and DMBs to stop refusing old dollar bills and lower denominations. Complaints from customers over the refusal to accept these notes had led to sanctions. The then-director of the Currency Operations Department, Ahmed Umar, also advised these bodies against stamping and defacing dollar bills, as this would cause them to fail authentication tests during processing and sorting.

See also  News in Photographs: Buhari Meets APC Govs Ahead of National Convention

Attempts to Curb the Slumping Value of Naira

In 2023, under the directive of President Bola Tinubu, the CBN announced the unification of all segments of the forex exchange (FX) market, allowing the exchange rate to fluctuate based on market supply and demand. President Tinubu emphasized the need for swift action on fuel subsidy to prevent further financial strain.

Despite early positive signs, the Naira eventually breached the ₦1,000 threshold, reaching over ₦1,500/$, leading to an FX liquidity crisis. In response, the CBN implemented several policy measures, including targeting International Money Transfer Operators (IMTOs), removing the allowable limit of exchange rates quoted by them, and restricting their operations to inbound transfers only. The CBN also revoked the licenses of Bureau De Change operators engaged in unethical practices.

According to CBN Governor Yemi Cardoso, represented by the Director of the Risk Management Department, Blaise Ijebor, these guidelines aim to address the challenges faced by BDCs in the foreign exchange market and promote a more stable and transparent financial environment. The apex bank also instituted specific guidelines for Bureau de Change operators, prohibiting activities such as street trading of foreign currencies, maintaining accounts or accepting assets for safekeeping, taking deposits or granting loans to the public, retail sale of foreign currencies to non-individuals (except for business travel allowance, international outward transfers, or offshore business), and maintaining foreign correspondent relationships without prior approval.

4o

[logo-slider]