CBN Suspends Nationwide cashless policy, creates FX window for Investors, Exporters

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CBN Suspends Nationwide cashless policy, creates FX window for Investors, Exporters

CBN Suspends Nationwide cashless policy, creates FX window for Investors, Exporters
April 22
07:35 2017

The Central Bank of Nigeria (CBN) has once again suspended the nation-wide implementation of the cashless policy which commenced this month.

The CBN which disclosed this in a circular titled: “Re: Circular on National Implementation of the Cashless Policy,” dated April 20, 2017, a copy of which it posted on its website yesterday, did not give any reason for its abrupt decision.

In a related development, two weeks after opening a special foreign exchange (FX) window for Small and Medium Enterprises (SMEs) to enable operators import eligible finished and semi-finished items, the CBN yesterday established a fresh widow for investors and exporters tagged: “Investors’ & Exporters’ FX Window”.

Also yesterday, the CBN said it had received complaints from small and medium scale (SME) operators eligible for accessing foreign exchange (FX) under its newly opened window that they were being frustrated by the commercial banks.

This is just as the Minister of Finance, Mrs. Kemi Adeosun said revenue mobilisation remains critical to the success of Nigeria’s economic reform agenda.

The circular suspending the nationwide implementation of the cashless policy, signed by its Director, Banking and Payment System Department, Mr. Dipo Fatokun, directed banks to revert to old charges and refund customers that they had debited.

It stated that the existing policy before the announcement of the new policy would remain in place in Lagos, Ogun, Kano, Abia, Anambra, Rivers and Abuja.

“You will recall that a directive was issued on the nationwide implementation of the cashless policy vide our circulars with reference numbers BPS/DIR/GEN/CIR/04/001 dated February 21 and BPS/DIR/GEN/CIR/04/002 dated March 16.

“Please note that the new withdrawal and deposit processing fee charges above the threshold, as contained in the circulars referenced above, are hereby suspended until further notice. The position of the policy shall now revert to the status quo ante.

“The new policy already applied effective April 1, 2017 as contained in the circulars in reference above should be reversed and the old charges be applied. All necessary refunds should be made accordingly.”

The CBN had in February announced the re-introduction of charges on cash deposits by bank customers.

It had explained that the Bankers’ Committee at its 493rd meeting held on February 8, 2017, reviewed the cashless policy charges on withdrawal and deposit and then decided that the policy be extended to the 30 remaining states of the federation.

Among other charges, the earlier circular had shown that charges on deposits and withdrawals were reviewed such that for individuals with less than N500,000 cash deposit and withdrawals, there would be no charge. In addition, for cash between N500,000 and N1 million, deposit would be 1.5 per cent charge while for withdrawals two per cent of the amount.

CBN Creates FX Window for Investors, Exporters

A circular issued by the CBN disclosed that the purpose of the fresh forex widow for investors and exporters was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

The circular signed by the Bank’s Director in charge of Financial Markets, Dr. Alvan Ikoku, listed eligible transactions under the new window to include invisible transactions such as loan repayments, loan interest payments, Dividends/Income Remittances, Capital Repatriation, Management Service Fees and Consultancy fees.

Also on the eligible list are software subscription fees, technology transfer agreements, personal home remittances and any such other eligible transactions including ‘miscellaneous Payments’ as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

While explaining that the invisible transactions under this window excludes international airlines ticket sales’ remittances, the circular added that the window covered Bills of Collection and any other trade-related payment obligations, which are at the instance of the customer.

The circular further clarified that the permitted invisible transactions and Bills for Collection were eligible to purchase foreign currency sourced from the CBN Forex window limited to Secondary Market Intervention Sales (SMIS) Wholesale (Spot and Forwards) only.

According to the CBN, international airlines ticket sales’ remittances shall only be eligible to access the CBN FX window (SMIS-Retail and Wholesale; spot and forwards.

On participants in the new window, it disclosed that supply of foreign currency to the window shall be through portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to naira. The CBN, it added, shall also be a market participant at the window to promote liquidity and professional market conduct.

Taking cognisance of the slow progress made by corporates in on-boarding the FMDQ OTC Securities Exchange (FMDQ) Thomson Reuters FX Trading & Auction Systems, the CBN said participants at the new window would trade via telephone until appreciable progress is made with the FX trading systems on-boarding process.

The circular therefore advised authorised dealers to promote market transparency by encouraging their corporate clients to on-board to ensure the activities of the window are operated on the forex trading systems.

To provide price discovery to the market, it said the FMDQ will be charged with polling buying and selling rates and other relevant information from the major participants in the market to provide participants with the requisite price discovery, and the CBN with the indicative market depth until the market migrates to the FX Trading systems.

As part of the operational requirements of the window, the CBN circular said the exchange rates of the transactions in the window shall be as agreed between authorised dealers and their counterparties. It also said that the CBN reserved the right to intervene as a buyer or seller, as it deems fit, in the window, adding that information on transactions between authorised dealers shall be reported to the CBN on a daily basis.


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