In furtherance of its drive on the implementation of its recent ‘Guidelines On Implementation Of The Foreign Currency Disclosure, Deposit, Repatriation, And Investment Scheme, 2024, the Central Bank of Nigeria (CBN) has authorized banks to use the free foreign exchange (FX) deposit window for legitimate trading in the FX market.
The guidelines, which were released about a week ago by the monetary authorities on the implementation of a nine-month programme effective from October 31, 2024, provided the modalities for the participation of commercial, merchant, and non-interest banks in the scheme.
The Federal Government recently announced, that allows individuals to deposit dollar bills held outside the formal banking system without scrutiny.
The apex bank, in a Notice of the scheme guidelines issued on Tuesday and jointly signed by the Acting Director of the Financial Policy and Regulation Department, John Onojah, and the Acting Director of the Banking Supervision Department, Dr. Adetona Adedeji, indicated that the implementation of the guidelines, which allow the banks to trade with the FX deposited by scheme participants, commenced on Wednesday this week.
The guidelines partly read: “Commercial, merchant, and non-interest banks may trade with any deposited ITFC (Internationally Tradable Foreign Currencies) not immediately invested by a participant, provided that the funds would be made available to the participant when needed.
“Interest payment by CMNIBs on the balance in the designated domiciliary account shall be in line with relevant provisions of the Guide to Charges by Banks and Other Financial Institutions in Nigeria”, the CBN added.
It would be recalled that the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, had while briefing journalists at the end of the National Economic Council (NEC) meeting in Abuja, last week said the scheme was introduced as part of ongoing monetary policy measures aimed at tackling abuses in the financial system, including the volatility of the exchange rate of the naira in the FX markets.
According to the minister, such individuals have a nine-month grace period to comply with the directive without attracting legal liability or financial penalties.
Edun, who also gave some highlights on the achievements recorded by the government on its economic relief measures, disclosed that 25 million Nigerians had so far benefitted from federal social protection initiatives, including digital outreach, microenterprise loans, and sector-specific support for power, agriculture, manufacturing, health, and compressed natural gas (CNG) initiatives.
He expatiated: “One element of the cost increase is the foreign exchange rate, and that is demand and supply. There is going to be a release today, details by the Federal Government through the Ministry of Finance, in conjunction with the Central Bank, a programme, starting today, 31st of October, and lasting nine months, that will allow people to bring in cash that is outside the banking system.
“So therefore it is unsafe, it is unsecure and it is outside of legal limits. They will allow forbearance to bring dollars cash. Let me emphasize once again, it is to bring dollars that they are holding outside the system to be able to bring them in and credit it to their bank accounts, as long as it is not proceeds of crime, illicit money. There will be no penalty, there will be no taxes, there will be no questions.
“They just meet the normal ‘Know Your Customer’ criteria of banks and they have an opportunity to bring in those funds, make them safe, make them secure, and make them available through normal, economic activity.
“The details of that, the guidelines of that, will be released, first of all, the announcement by the Ministry of Finance and the guidelines later will follow very quickly by Central Bank.
“That is an opportunity, not just for people who would normally like to comply, to be compliant with the laws and normal business practice, but of course, it gives us an opportunity to bring those dollars from where they are doing nothing to where they are within the financial system, they add to our reserves, and of course can help with the exchange rate”, Edun added.
