The Central Bank of Nigeria (CBN) has released a press statement on June 18, 2023, offering additional guidance to Deposit Money Banks (DMBs) regarding the operational adjustments to the foreign exchange market, which were announced on June 14, 2023.
This statement comes after an extraordinary Bankers’ Committee meeting, during which the implementation and implications of the policy changes were discussed extensively, considering their impact on the banking public.
The CBN states that the policy changes aim to foster transparency, liquidity, and price discovery in the foreign exchange (FX) market. The objectives include improving FX supply, discouraging speculation, enhancing customer confidence, and ensuring overall stability in the FX market.
Under the new rules, both visible and invisible transactions, such as medical expenses, school fees, Business Travel Allowance/Personal Travel Allowance, airline transactions, and other remittances, are eligible for processing through the Investors’ and Exporters’ (I&E) window.
Deposit Money Banks (DMBs) are required to promptly process all eligible invisible transactions on behalf of their customers, utilizing the applicable rate at the I&E window. Furthermore, ordinary domiciliary account holders will have unrestricted access to funds in their accounts.
Domiciliary account holders are now permitted to utilize cash deposits up to USD $10,000 per day or its equivalent via telegraphic transfer. DMBs are obliged to provide returns to the CBN, including the purpose of such transactions.
The CBN has lifted restrictions on cash deposits into domiciliary accounts, provided that DMBs comply with proper Know Your Customer (KYC) procedures, exercise due diligence, and adhere to existing Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) laws, as well as other relevant regulations.
The CBN assures the banking public of its commitment to ensuring a stable and efficient FX market that caters to the needs of all legitimate users. It will prioritize the orderly settlement of committed FX forward transactions to further boost market confidence.
Additionally, the CBN will streamline its Cash Reserve Ratio (CRR) maintenance processes and ensure equitable implementation across the banking industry.
Notably, the new guidelines enable Nigerians to make forex transfers between domiciliary accounts, even if they are held in different banks. This marks a departure from previous restrictions that limited transfers within the same bank only.
These updates bring greater clarity and access to foreign exchange transactions for Nigerian individuals and businesses, facilitating smoother operations in the FX market and empowering customers with more flexibility and convenience.