CBN To Punish Banks For Forex Infractions

The Central Bank of Nigeria (CBN) on Monday said it will sanction any Deposit Money Bank (DMB) in breach of its earlier directive of March 3, 2017 instructing them to, among other things, open teller points for retail forex transactions and to have electronic display boards in all their branches, showing rates of all trading currencies.
The apex bank warned that it will slam stiff regulatory sanctions on banks that fail to comply fully with the directive by October 13, 2017.

A circular signed by the Director, Banking Supervision, Ahmad Abdullahi, stressed that the Bank would bar erring DMBs from all future CBN foreign exchange interventions.
It will be recalled that the CBN in March 2017 had directed banks and authorized dealers to open a teller point for retail FX transactions (PTA/BTA and SME) including buying and selling, in all locations in order to ensure access to foreign exchange by their customers and other users, without any hindrance.

The March 2017 circular also directed DMBs to have electronic display boards in all their branches, showing rates of all trading currencies, which it urged customers to insist on in processing their foreign exchange transactions for invisibles and the SMEs window.
While noting that the objective was aimed at creating awareness among members of the public regarding the availability of such facilities in branches of the banks at clearly disclosed prices, the CBN frowned at the banks for not fully complying with its directives.

Meanwhile the CBN continued its intervention in the various sectors of the inter-bank Foreign Exchange market with the injection of $545 million.
Accordingly, the CBN has given the errant banks a four-week period, expiring on October 13, 2017, to fully comply with its directives or face regulatory sanctions, which it noted would include but not limited to being barred from all future foreign exchange interventions by the apex bank.

Giving a breakdown of the Bank’s latest forex injection, its Acting Director, Corporate Communications, Isaac Okorafor, revealed that the retail Secondary Market Intervention Sales (SMIS) received the largest intervention of $285 million.
Other components of the released figures include the $100m offered for wholesale SMIS, $90m for the SMEs window and $70m for ‘invisibles’ such as Basic Travel Allowances, tuition fees and medical payments.
According to Okorafor, the amount released underscored the CBN’s commitment to ensure a liquid interbank foreign exchange market, where all genuine requests will be met in line with extant forex guidelines.

September 19, 2017