Worried by the continued circulation of new naira notes in informal markets, allegedly traced to some banks, the Central Bank of Nigeria (CBN) has announced stringent penalties for Deposit Money Banks (DMBs) found culpable in the illegal business.
The new regulatory oversight to prevent abuse, is considered by by CBN as part of its ongoing efforts to ensure responsible currency distribution, while trying to deter the misuse of Nigeria’s currency and ensure that cash reaches legitimate end-users.
Besides, the latest directive, through a circular dated November 13, 2024, signals the CBN’s resolve to address lingering issues in cash management, particularly as it relates to the abuse of the naira notes, which is becoming a national embarrassment to the country.
Consequently, while trying to make the deposit money banks to be compliant with the accompanying actions, CBN’s action will also reinforce their reputation as responsible financial institutions.
Specifically, coming at the yuletide season, the effectiveness of the CBN’s measures may be under scrutiny, underscoring its ability to redeem its dwindling image, particularly as it relates to arbitrariness of banks in their dealings with their customers
CBN, warned that any bank linked to cash seized from hawkers would face a 10% fine on the total value of the withdrawn funds.
Subsequent violations will attract an incremental penalty of 5%.
The circular, signed by Muhammad J. Olayemi, Acting Director, Currency Operations Department, emphasised that these measures aim to curb the abuse of naira notes and promote an efficient cash distribution system.
It reiterated the CBN’s commitment to enforcing its Clean Note Policy, which seeks to maintain the integrity of the naira by ensuring proper handling and circulation of banknotes.
It further warned DMBs against cash hoarding and diversion, noting that such practices undermine access to cash, particularly during high-demand periods like the yuletide season.
Banks engaging in these activities will face sanctions, with the CBN working closely with law enforcement agencies to intensify spot checks and mystery shopping activities.
The circular read: “For the avoidance of doubt, it should be noted that:
“a) DMBs, to whom cash seized from “hawkers” of cash is traced, will be penalized 10 per cent of the total value of cash withdrawn on the day the seized cash was withdrawn from the Central Bank of Nigeria. Every subsequent offense will incur an incremental penalty of 5 per cent.
ALSO READ:Amid Anxiety On Non Performing Loans In Banks, Nigeria’s Inflation Rate Rises To 33.9% In October
“b) DMBs found engaging in cash hoarding, diversion, or any actions that hinder efficient cash distribution, including violations of the Clean Note Policy, will incur appropriate sanctions.”
The circular highlighted the need for banks to prioritise the disbursement of cash through Automated Teller Machines (ATMs) to enhance public access and minimize reliance on unauthorised channels.
Some analysts say that with the festive season approaching, the demand for cash is expected to surge, which may have prompted CBN to double down on its regulatory efforts.
The circular advised banks to strengthen their internal processes and ensure strict compliance with the guidelines for cash disbursement.
To enforce accountability, the CBN will intensify its monitoring activities, working alongside law enforcement agencies to identify and penalise offenders.
These efforts, the apex bank noted, are essential to addressing systemic inefficiencies and ensuring the effective distribution of cash across the country.
The circular also noted: “As we approach the yuletide season, with an anticipated increase in cash demand, DMBs are advised to implement internal controls for responsible disbursement and accountability in respect of mint banknotes payouts at their outlets. To enhance public access to cash, we encourage banks to prioritize cash distribution through ATMs.
“During this season, the Bank, in collaboration with relevant law enforcement agencies, will intensify spot checks and mystery shopping activities to monitor and enforce responsible cash distribution and prevent Naira abuse.”
