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Banking Sector

Confusion as More Banks Dispense Old Naira Notes Amidst Gross Rejection

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NAIRA - Investors King

As the scarcity of new naira notes bites harder in Nigeria, more Deposit Money Banks (DMBs) have reportedly issued old N500 and N1000 notes to their customers.

This has erupted reactions from the people who lamented that traders and service providers are rejecting the old naira notes.

Investors King gathered that some commercial banks including Polaris Bank, First Bank, Zenith Bank Plc, Sterling bank and others currently pay old N500 and N1,000 notes over their counters and Automated Teller Machines (ATMs)

Nigerians have been thrown into a state of confusion as the Supreme Court has ruled that the old notes are still legal tender, yet the Central Bank of Nigeria, CBN opposed the judgement.

Meanwhile, some Banks in Abuja that paid customers with the old naira notes later announced that they would not accept the old notes unless some conditions are met.

This angered more Nigerians who bitterly lamented how the government is insensitive to their plights with various contradictory policies.

One of the Access bank customers named Opeyemi explained that after giving old notes to them, the bank asked them to generate code from the CBN portal before they can deposit the old currency.

“They are asking us to go and generate online codes from the Central Bank of Nigeria before we can deposit the same old notes that they dispensed to us,” he said.

In an interview, the Secretary of Independent Petroleum Marketers Association of Nigeria (IPMAN) Abuja-Suleja, Mohammed Shuaibu said oil marketers await the pronouncement of the president on the matter before receiving old notes.

He further said the CBN and commercial banks have not given them directives to accept the old currency despite the Supreme Court ruling.

Shuaibu said, “there is so much confusion right now around this old naira notes issue. Our banks have not given us the go-ahead to collect it and they don’t accept it.

“However, if the banks say we should collect the old notes, of course, we will accept the notes. But as it is now, we have not got any official confirmation. We are only hearing it from people.

“Once the banks tell our members to accept it, then I can assure you that we will comply with ease. We are hearing that the banks have started giving out the old notes, but as for me, I’ve not set my eyes on the old N500 and N1,000 notes. We are only hearing it.”

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Banking Sector

Tinubu Aide Urges CBN Governor to Consider Political Impact of Economic Reforms

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Central Bank of Nigeria (CBN)

Tunde Rahman, a senior aide to Nigerian President Bola Tinubu, has said Central Bank of Nigeria (CBN) Governor Olayemi Cardoso must start factoring in the political effects of CBN’s decisions.

In his piece, titled “Navigating the Dilemma: Political Considerations in Economic Reforms,” sheds light on the complexities facing Cardoso as he seeks to stabilize Nigeria’s economy.

Rahman’s commentary shared through the Presidency’s official channels, acknowledged the challenges Cardoso confronts, particularly regarding the country’s currency devaluation and the contentious plan to relocate CBN staff from Abuja.

While Rahman refrained from direct criticism of Cardoso’s policies since his appointment by Tinubu, he underscored the necessity for the CBN governor to strike a delicate balance between economic imperatives and political sensitivities.

The upcoming meeting of the monetary policy committee presents a pivotal juncture for Cardoso, where discussions are expected to revolve around potential interest rate hikes to counter inflation and bolster the national currency.

Rahman’s insights underscore the high stakes involved in these decisions, especially given the public outcry over soaring living costs and inflation rates nearing three-decade highs.

Cardoso’s commitment to orthodox central banking, following a period marked by blurred monetary and fiscal policy lines, reflects his determination to navigate Nigeria’s economic landscape with prudence.

Nonetheless, Rahman’s op-ed serves as a reminder of the intricate interplay between economic reforms and political realities, urging Cardoso to exercise flexibility in policymaking, especially in matters with broader political implications.

As Nigeria grapples with economic challenges, the spotlight remains firmly fixed on Cardoso and the CBN’s response to the nation’s evolving financial landscape.

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Banking Sector

CBN’s New Foreign Currency Gateway Bank Raises Concerns Over Nigerian Banks’ Liquidity: Fitch Ratings

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN)’s announcement of a new Foreign Currency Gateway Bank has stirred concerns over the liquidity of Nigerian banks, according to recent commentary from credit rating agency Fitch Ratings.

The proposed bank, designed to centralize correspondent banking activities, has prompted Fitch to issue cautionary remarks regarding its potential impact on the banking sector’s foreign currency (FC) liquidity.

Governor of the CBN, Dr. Olayemi Cardoso, unveiled plans for the Foreign Currency Gateway Bank to streamline and centralize correspondent banking functions, currently dominated by two major banks.

The initiative is part of the CBN’s efforts to address Nigeria’s persistent forex crisis.

Fitch Ratings expressed apprehension, highlighting the potential negative effects on the banking sector’s FC liquidity.

The agency noted that the centralization of correspondent banking activities, coupled with recent measures by the CBN, might exacerbate liquidity challenges for Nigerian banks.

Furthermore, Fitch cautioned that the recent devaluation of the naira, coupled with the CBN’s circular prohibiting banks from holding net long foreign currency positions, could further strain FC liquidity.

The prohibition on net long FC positions may leave banks more vulnerable to naira depreciation, potentially affecting their capital positions.

The CBN’s move to harmonize different segments of the foreign currency market last June led to significant naira devaluation, with the local currency closing at 899/$ at the official market by the end of last year.

As of February 13, the naira experienced a second devaluation, reaching 1,516/$, marking a 40% devaluation.

While the shift away from a managed exchange rate regime aims to attract capital inflows and mitigate forex shortages, it poses short-term risks such as heightened inflation and potential strains on loan quality and capital adequacy within the banking sector, as highlighted by Fitch Ratings.

As discussions continue, stakeholders closely monitor the implications of the proposed Foreign Currency Gateway Bank on Nigeria’s financial landscape.

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Banking Sector

CBN Mandates Automated Transaction Monitoring to Combat Fraud in Nigeria

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has introduced new regulations mandating banks to implement automated transaction monitoring systems to combat the growing threat of fraud in the country’s financial sector.

Under the CBN’s latest ‘Consumer Protection Regulations’ draft, banks are required to adopt advanced measures to protect customers’ assets and prevent fraudulent activities.

These measures include multi-variant customer identification, multifactor authentication mechanisms for transactions, automated transaction monitoring, alert functions, and behavioral monitoring.

The move comes amid a significant rise in fraud cases across Nigeria, with the first half of 2023 witnessing 24,232 reported fraud cases totaling N12.33 billion.

The banking industry has seen 110 executives and junior staff members dismissed due to fraud-related offenses amounting to N82 billion over the past two years.

According to the CBN, sensitizing customers on fraud threats or scams and providing secure and simple user interfaces for digital financial services are crucial steps to minimize the risk of fraudulent activities.

The regulations emphasize the importance of continuous efforts to enhance cybersecurity and protect consumers in an increasingly digital financial landscape.

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