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In line with CBN directive, Nigerian banks expose customers with suspicious dollar transactions – Arise News

By on February 27, 2022 0

In line with the Central Bank of Nigeria (CBN) resolution to end an arbitration regime in the foreign exchange market, some Nigerian banks have started disclosing the identities of customers who allegedly obtained dollars under false pretenses and traded them at a profit price on the parallel market.

This comes as the aggregate broad money supply, M3 Money, which represents the amount of money circulating in the economy, reached 44.56 trillion naira in January, representing a growth of 1.70% since the beginning of the year, according to a CBN report. , showed.

Some bank customers have taken advantage of the lucrative 37% discrepancy between the official and black market exchange rates by obtaining the dollar at the official rate of around 416 naira, only to then resell on the unauthorized market at a higher average rate. high of around N570.

These customers can circumvent regulations by presenting false travel documents, prompting the apex bank to order banks to inform their customers of an impending crackdown on saboteurs in the foreign exchange market.

However, a Bloomberg report on Saturday found that some banks have started implementing CBN guidelines by posting the names of customers who filed suspicious claims for foreign exchange transactions on their websites last week.

For example, Zenith Bank Plc, the country’s largest lender by market value, published 987 names of customers engaging in the illegal practice on its website, Fidelity Bank Plc identified 83 customers; So far, First City Monument Bank Plc has listed eight names, while Wema Bank has only released one. The list of banks that complied also included the United Bank for Africa Plc.

The apex bank had asked the banks to identify these customers and ensure that they repaid the hard currency. The regulator first alerted banks to the ongoing practice last year.

The CBN had said: “As a result, following the various measures already in place, all banks are requested to publish on their websites the names and BVNs of defaulting customers who present false travel documents or cancel their tickets and do not return not purchased tickets. PTA/BTA within two weeks as stipulated in the Client Declaration Form signed by them. »

Some depository banks acting on the CBN directive had sent out notices to their customers warning that the identities and Bank Verification Number (BVN) of those who violated the apex bank’s new foreign exchange policy on personal travel and overseas professionals would be published.

The CBN had also ordered travelers who buy currency from banks for travel purposes but do not embark on the trip two weeks after their scheduled travel date to return the currency to the banks.

Banks in their notices have also highlighted the consequences for customers who engage in fraudulent and unethical practices with respect to the purchase of Personal Travel Allowances (PTAs) and travel allowances. business (BTA).

In its notice to customers, one of the tier 1 banks said: “We have been instructed by the Central Bank of Nigeria to inform all our customers that unethical practices to circumvent the new CBN policy on selling forex, such as presenting false travel documents, visas and cancellation of air tickets, after purchasing personal travel allowance and business travel allowance, will no longer be tolerated.

“Default customers who present fraudulent travel documents or cancel their tickets and do not refund purchased PTAs and BTAs within two weeks, as indicated in the signed Customer Declaration Form, will have their identity and bank verification numbers published.

“We aim to implement this policy immediately as an organization fully compliant with the rules and regulations of the Central Bank of Nigeria.

“Our bank is committed to partnering with the CBN to ensure a transparent, efficient and stable foreign exchange market that meets the needs of all legitimate users.”

Meanwhile, the aggregate broad money supply, M3 Money, which represents the amount of money circulating in the economy, grew to 44.56 trillion naira in January, representing a growth of 1.70% since the beginning of the year, a report from the CBN, showed.

A recently released survey of depository companies by the apex bank, cited by Cowry Asset Management Limited, showed growth was driven by a 1.46% rise in M2 to N44.46 trillion and a sharp rise in CBN bills to 107.38 billion naira from 100 million naira the previous month) as part of efforts to rein in excess liquidity.

M2 is a measure of money supply which includes cash, deposit checks and is easily convertible into currency

However, analysts at Cowry Asset Management Limited noted that the growth in central bank bills also came with cost implications, as well as increased indebtedness from the apex bank.

According to the latest edition of Cowry Financial Markets Review, Outlook & Recommended Stocks, growth in broad money has been supported by increases in quasi-money (consisting of time deposits, near-maturity securities, foreign currencies etc.) and narrow money or M1 Money (including demand deposits and non-bank currencies) by 0.34% and 3.03% to N25.74 trillion and N18.72 trillion, respectively.

“The rise of quasi-money is perhaps not unrelated, among other things, to the growing appetite of pension fund administrators to place retirement savings with commercial banks at interest rates relatively attractive. “As reported in the February 11, 2022 edition of our CWR, we have observed that money has shifted from treasury bill securities to local money market securities (LMMS), particularly bank investments,” the report said. .

He noted that total funds invested in this investment category increased by 20.04% to reach 2.03 trillion naira in December 2021 (bringing its share of total assets to 15.09%), from 1.69 trillion naira in December 2020 (or 13.71 percent). cent of total assets).

The CBN document reportedly said that the reserve currency increased by 2.36% to 13.61 trillion naira as bank reserves at the Central Bank increased by 3.51% to 10.32 trillion naira. naira (partly in line with increased deposits in banks), partially offset by a 5.52% decline in non-bank foreign exchange to 2.78 trillion naira.

On the asset side, net domestic credit increased by 2.49% to N49.73 trillion, while credit to the private sector increased by 0.73% to N35.45 trillion while credit to the private sector government increased by 7.13% to N14.28 trillion. However, net foreign assets moderated by 1.79% due to pressures exerted on the Nigerian external sector.

Meanwhile, analysts at Cowry Assets have warned that rising narrow money without faster GDP growth could lead to higher inflation in 2022.

He noted that in 2021, Narrow Money’s velocity moderated to 10.16 times from 11.49 times in the previous year, even though Narrow Money grew by 14% over the period, indicating that the productivity of the country needs a lot of improvements in the future.

The report warns that escalating hostilities between Russia and Ukraine and the concomitant instability in the global oil market will put pressure on the country’s external reserves.

He said: “Meanwhile, following the Russian invasion of Ukraine, we are concerned that Nigeria will not benefit optimally from any subsequent rise in crude oil prices due to its crude oil production. This would increase pressure on external reserves as well as on exchange rates, as revenue from the oil dollar, its main source of foreign currency, would struggle to meet the higher cost of imported refined products in plus other imports.

Festus Akanbi