Commercial banks are back in the business of foreign currency (dollar) transfer after the Central Bank (CBN) lifted restrictions on such transactions.
The banks can now transfer foreign currency in customers’ domiciliary accounts to their local and international business partners subject to a daily cumulative limit of $10,000.
Violation attracts regulatory sanctions.
Confirming the policy shift yesterday to The Nation, Central Bank of Nigeria (CBN) spokesman, Ibrahim Mu’azu, said the apex bank decided to reverse the policy because its finding showed that currency substitution by customers which made it enforce it in the first place has been tackled.
According to him, bank customers before now were converting naira to dollar and depositing the proceeds in the hope that the dollar would continue to appreciate at the parallel and official markets. He said stability has now returned to the market despite the volatility in the parallel market rate with the naira exchanging for over N300 to one dollar.
The banks are already communicating the new changes to their customers.
Guaranty Trust Bank (GTB) in an e-mail entitled:Resumption of Transfers for Forex Cash Deposits to its domiciliary account holders said: “We are pleased to inform you that you can now transfer Foreign Currency Cash deposits made into your GTBank domiciliary account(s) via Internet Banking, Mobile App or at any of our branches nationwide, subject to a daily cumulative limit of $10,000.”
Keystone Bank in a similar message said: “We are pleased to advise that you can now deposit forex or dollars into your domiciliary accounts and transfer up to $10,000,” the lender said yesterday in an email to customers.
The lifting of the over six-month old ban, followed complaints by local and international stakeholders that the restriction was not only killing businesses but had led to diversion of huge forex to neighbouring countries.
The lifting of the Central Bank of Nigeria (CBN’s) ban on dollar deposit transfer is part of the gradual relax of its stringent foreign exchange (forex) policies triggered by sharp drop in crude oil prices and reduced inflow of petrodollars.
It is also in response to International Monetary Fund (IMF) directive that the polices should be relaxed to avoid alienating Nigeria from its international trade partners and calls from small businesses, manufacturing concerns, the International Monetary Fund (IMF), and political leaders.
CBN Spokesman, Ibrahim Mu’azu had defended the ban on dollar deposit receipt, saying it was to curtail illicit fund flows, money laundering, and terrorism financing both in Nigeria and around the world.
The apex bank, according to him, would increase its vigilance to ensure that Nigerian banks were not used as conduits for illicit fund flows, especially in foreign currencies.
He said that the banks would continue to curtail the acceptance of foreign currency cash deposits, much the same way as customers in other countries cannot just walk into banks and make foreign currency cash deposits without proper documentation.
”We will also ensure that persons who venture into currency speculation and currency substitution find it unattractive and dangerous.
“In these efforts, we seek the continued cooperation of all Nigerians to make this work for the enhancement of our shared progress, rather than the prosperity of a greedy few amongst us,” he said.
Mu’azu did not respond to a text message on the matter sent to his phone.
But experts said they expect the CBN to further lift ban on its directive that commercial banks pay for their dollar purchases at the official forex window 48 hours ahead of the bid date.
Under the policy, banks and other forex dealers are required to deposit the naira equivalent of the total forex bids at the apex bank 48 hours in advance.
But analysts insist that the fall in Nigeria’s monthly forex earnings from $3.2 billion to $1 billion in the last six months due to drop in crude oil prices was responsible for the strict forex restrictions being implemented by the CBN.
Oil prices have dropped from a peak of $114 barrel in July 2014 to as low as $29/barrel this month.
The reserves have also suffered great pressure from speculative attacks, round-tripping and front loading activities by actors in the forex market.