In a significant move, the Central Bank of Nigeria (CBN) has issued fresh guidelines to Deposit Money Banks (DMBs) regarding operational changes in the foreign exchange market. The new directives, announced on June 14, 2023, aim to provide clarity and facilitate transactions. Here are the key points highlighted by the CBN:
All visible and invisible transactions, including medical expenses, school fees, BTA/PTA, airline remittances, and other forms of remittances, are now eligible for the Investors’ and Exporters’ (I & E) window. DMBs must ensure prompt processing of all eligible invisible transactions on behalf of their customers using the applicable rate at the I & E window.
Ordinary domiciliary account holders will have unrestricted access to funds in their accounts.
Domiciliary account holders can now utilize cash deposits up to a maximum of $10,000 per day, either by withdrawal or telegraphic transfer. DMBs are required to submit returns to the CBN, including the purpose of such transactions.
Cash deposits into domiciliary accounts will not be restricted,as long as DMBs adhere to proper KYC (Know Your Customer)procedures,conduct due diligence, and comply with anti-money laundering/counter-terrorism financing laws and regulations.
The CBN will prioritize the orderly settlement of any committed FX forward transactions to boost market confidence. The Bank will normalize its Cash Reserve Ratio (CRR) maintenance processes and ensure equitable implementation across the banking industry.
The CBN assures the public that it remains committed to maintaining a stable and efficient FX market that caters to the needs of all legitimate users.
Regarding cash deposits:
Previously, there were restrictions on the amount of cash that Nigerians could withdraw from their domiciliary accounts. The restrictions caused confusion, as people were uncertain about the withdrawal limits. At one point, the withdrawal of previously deposited cash was limited to $10,000 per week or even per month, depending on the prevailing central bank policy.
However, the new guidelines have brought a significant change. Nigerians can now withdraw or transfer up to $10,000 per day from their domiciliary accounts. It’s worth noting that transfers originating from “inflow,” such as wired transfers into a deposit account, have no limits.
The CBN clarifies that there is no restriction on the amount of cash that can be deposited into domiciliary accounts. This revision will be welcomed by Nigerians who have faced difficulties accessing their cash deposits due to the previous restrictions imposed by the central bank.
Furthermore, this development eliminates concerns about limitations when using debit cards linked to domiciliary accounts abroad. It is also expected to improve liquidity in the forex market by encouraging more people to deposit their foreign currency holdings in banks.
