The Central Bank of Nigeria (CBN) has issued a caution to Deposit Money Banks (DMBs) and authorised currency dealers to avoid rejecting outdated and lower dollar denominations from consumers in the country.
According to the apex bank, the decision became necessary since it was besieged with complaints from clients after conducting consumer market intelligence.
A circular dated June 27, 2024, and signed by CBN’s acting director of currency operations, Solaja Mohammed Olayemi, read: “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 deposit, is still in force and must be adhered to and complied with by all relevant parties.”
CBN said all banks and authorised FX dealers “should henceforth accept both old series and lower denominations of United States Dollars (USD) that are legal tender for deposit from their customers”.
The financial regulator warned that sanctions will be meted out on any bank or authorised forex dealer who refuses to accept old series or lower denominations of dollars from their customers.
Earlier Warnings From CBN
The CBN issued directives in 2021, instructing forex dealers and DMDs to stop refusing old dollar bills and denominations.
Complaints from customers over the refusal to accept the lower notes as a means of transaction had also led to sanctions
The then-director of, the Currency Operations Department Ahmed Umar also advised these bodies from stamping and defacing the dollar bill as it would fail the authentication tests during processing and sorting.
Attempts To Curb Slumping Value Of Naira
In 2023, the CBN through the directive of President Bola Tinubu announced the unification of all segments of the forex exchange (FX) market, indicating that the exchange rate will rise or fall based on the supply and demand in the market.
The reason according to President Tinubu was “We need to take the steps to stop the bleeding of our finances through speedy action on fuel subsidy. We have no choice,”
Despite early positive signs, the Naira would eventually breach the ₦1,000 threshold hitting over ₦1,500/$.as of today which would lead to an FX illiquidity crisis
To tackle this challenge, the CBN swiftly implemented a series of policy measures, one of such was targeted International Money Transfer Operators (IMTOs), removing the allowable limit of exchange rates quoted by them as well as limiting their operations to inbound transfers only
Another attempt was the revocation of licenses of Bureau De Change operators engaged in unethical practices.
According to Cardoso, represented by the Director of the Risk Management Department, Blaise Ijebor, the guidelines aim to address the challenges faced by BDCs in the foreign exchange market, promoting a more stable and transparent financial environment.
The apex bank also instituted specific guidelines for Bureau de Change operators, prohibiting them from engaging in various activities.
These included street trading of foreign currencies; maintaining accounts or accepting assets for safekeeping/custody; taking deposits or granting loans to the public in any currency or form; retail sale of foreign currencies to non-individuals (except for business travel allowance, international outward transfers, or off-shore business); maintaining foreign correspondent relationships with foreign establishments without prior approval; opening or maintaining accounts with foreign banks or financial institutions without prior approval