Guaranty Trust Bank Limited (GTBank) has raised its monthly spending limit on Naira Mastercard from $100 to $200 for international POS and online transactions, GTBank disclosed in a statement forwarded to all customers on Friday 12, 2021.
The leading bank had reduced the international spending limit on its Naira Mastercard at the peak of the COVID-19 pandemic in 2020 when Nigeria’s foreign revenue plunged with global oil prices. The move was to allow the lender better manage the change in Nigeria’s economic realities while simultaneously servicing its large audience during the most challenging period of this era.
However, with the crude oil trading at over $86 a barrel and the Nigerian foreign reserves hovering at over $41 billion as of November 15, 2021, GTbank has now reviewed upward its international spending limit for only POS and online transactions. Meaning, international ATM withdrawal is still prohibited.
The bank, in the email to all customers, said “We would like to inform you that the monthly spending limit on your Naira Mastercard has been reviewed upwards from $100 to $200 for international online and POS transactions,” the bank stated in an email to customers.
“For further enquiries, please contact our Card Services Team at firstname.lastname@example.org or call GTConnect, our 24-hour fully interactive self-service centre, on 08029002900 or 08039003900 or reach us on WhatsApp via +23470016974994.”
Understanding International Spending Limit on Mastercards
The Central Bank of Nigeria (CBN) supplies GTBank and other financial institutions operating in Nigeria with the necessary dollar liquidity to meet customers’ demand for international payments like tuition fees, wire transfers for purchase of goods, etc.
But because the CBN’s dollar generating source, crude oil was badly hit during the peak of COVID-19, the apex bank could not sustain its intermittent dollar intervention program necessary to plug dollar deficit in Africa’s largest economy, leaving financial institutions scrambling with huge dollar backlogs.
Frustrated with no solution in sight, GTBank and other lenders started lowering international spending limits on their MasterCard for three reasons: 1, few unscrupulous individuals were alleged to be withdrawing uncontrollably at various ATMs abroad, in a suspected money laundering, at the detriment of genuine forex buyers looking to import raw materials into the economy.
2, Businesses or individuals dealing in items restricted from accessing Forex from CBN and Deposit Money Banks (DMBs) were using the Naira MasterCard to make payments for restricted items. In some cases, certain individuals were reported to have over ten MasterCards and encouraged family members to do the same.
3, The banks do not have dollar liquidity to meet rising forex demand from customers.
Why the Gradual Increase in International Spending Limit on GTBank MasterCard
The Central Bank of Nigeria recently halted the sale of forex to Bureau De Change Operators (BDCs) in Nigeria, accusing them of encouraging illicit financial flows, among others. The apex bank then directed all Nigerians to approach their DMBs for their forex needs. It means banks are now receiving more forex allocation than when forex interventions were being shared with BDCs.
Therefore, banks can better appropriate forex allocations unlike when the huge amounts were finding their way into the unregulated black market. This might have necessitated the upward review of international spending limit on GTBank’s POS and online transactions. Other banks are expected to follow GTBank step.
CBN Extends Letter of Credit Issuance Timeline Amid Forex Crisis
Move Aims to Address FX Scarcity Challenges and Enhance Customer Service
The Central Bank of Nigeria (CBN) has announced an extension of the timeline for issuing letters of credit from 24 hours to five working days, according to the newly approved 2023 service charter.
This adjustment comes as the country grapples with foreign exchange scarcity, impacting local and international trade.
The 2020 service charter initially stipulated a 24-hour timeline for the issuance and management of letters of credit, but the updated charter now reflects a timeline extension to five working days.
Also, the CBN has prolonged the timeline for the registration of Form M and NXP from 24 hours to two working days.
The move follows the CBN’s unification of all forex market segments in June 2023, aimed at promoting liquidity and stability.
However, this measure appears to have led to increased market instability, with the naira losing nearly a fifth of its value.
Reports indicate that foreign suppliers are now rejecting letters of credit from Nigerian businesses, affecting the importation of goods and services.
Letters of credit are crucial for the payment of visible goods imports, wherein a bank commits in writing to pay the exporter a specified sum within a defined timeframe upon receipt of proper documentation from the customer.
The extended timelines for letters of credit, Forms M, and NXP in the service charter are seen as measures to manage cash flow and instill confidence in the process amidst the ongoing forex crisis.
CBN Governor Yemi Cardoso stressed the commitment to responsive and citizen-friendly governance through efficient, responsible, and transparent service delivery in the revised service charter.
The move is part of the CBN’s effort to comply with the Business Facilitation Act 2022 and enhance ease of doing business in Nigeria.
Unity Bank MD Advocates Policy Actions to Stem Gender-Based Violence in Nigeria
The Managing Director of Unity Bank Plc, Mrs. Tomi Somefun has called for comprehensive policy actions that will dismantle the structures that enable gender-based violence in Nigeria.
At the Ebony Life Cinema, the venue of the film screening in Lagos, Unity Bank supported the BECKMA movie premiere by ARDA Development Commuications Inc. which was held to highlight issues of Gender-Based violence and driving positive change in society.
Making the call, Somefun stated that the Bank committed to partnering with the movie premiere and putting the power of the brand behind BECKMA as the event brings sustainability and gender equality to the front burner.
Represented by Unity Bank’s Group Head of Compliance, Mrs. Patricia Ahunanya, Somefun noted that “9 percent of women aged 15 to 49 had suffered sexual assault at least once in their lifetime and 31% had experienced physical violence,” citing a recent study by UNDP in Nigeria.
Speaking further, Somefun said “Gender-based violence is not just a women’s issue, but a societal ill that demands our collective attention. It is high time for us to step forward and advocate for comprehensive policy actions that will dismantle the structures allowing such atrocities to persist”.
She added, “I urge policymakers to enact stringent laws against gender-based violence, ensuring swift and severe consequences for perpetrators. Our homes and various organisations must also be a catalyst for change, inspiring others to follow suit.”
While commending the ARDA Development Communications Inc. for their initiatives to promote gender equality and empowerment in line with SDG5, Somefun assured of the Bank’s commitment to sustainable initiatives and further collaborative initiatives and advocacy programmes for the elimination of gender-based violence.
Nigeria’s NIBSS Directs Banks to Disconnect Non-Deposit Financial Institutions from NIP System
Banks in Nigeria have received a directive from the Nigeria Inter-Bank Settlement System (NIBSS) to disconnect Switches, Payment Solution Service Providers (PSSPs), and Super Agents from the NIBSS Instant Payment Outwards System.
The circular, dated December 5, 2023, highlighted that including these non-deposit-taking financial institutions as beneficiaries on the NIP funds transfer channels violates the Central Bank of Nigeria (CBN) guideline on electronic payments.
The NIBSS emphasized that while Switches, PSSPs, and Super Agents might process outward transfers as inflows to banks, their licenses do not permit them to hold customers’ funds.
The circular referred to the CBN’s guidelines on electronic payment of salaries, pensions, suppliers, and taxes, dated February 2014, as the basis for this regulatory stance.
The directive also pointed to a circular dated May 11, 2018, titled “Permissible Services and Products of PSSP Operation in Nigeria,” reinforcing the need for compliance.
As a result, banks were urged to delist all Switches, PSSPs, and Super Agents from the NIP Outward Transfer channels while allowing their participation in inward transfers.
In Nigeria’s payment ecosystem, operators are required to obtain licenses such as Switching and Processing, Mobile Money Operations, Payment Solution Services, or Regulatory Sandbox from the CBN.
Only Mobile Money Operators (MMOs) have the authority to hold customer funds, according to the CBN’s regulatory framework.
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