Apparently worried by the rising amount of mutilated banknotes deposited with it by Deposit Money Banks (DMBs), the Central Bank of Nigeria (CBN) has warned banks to stop including composed currency notes in their deposits.
Composed banknotes are mutilated currency notes that comprise several parts of different banknotes of the same denomination. The parts of such currency notes are usually put together with the intention of receiving value.
The apex bank warned that failure to comply with the directive would attract a penalty of 400 percent of the value of the mutilated banknote deposited in its vault.
The latest directive was contained in a circular titled ‘Treatment of Composed Banknotes’, issued to all DMBs on March 31, and signed by the apex bank’s Director, Currency Operations Department, Ahmed Umar.
According to the banker, the directive takes effect from April 1.
The Director stated that the existence of such banknotes in the economy falsified the true value of the currency in circulation and could also be an avenue for fraudulent activities.
The circular stated, inter alia: “The management of the CBN observed with concern the increasing number of composed banknotes deposited by DMBs and request for replacement of such banknotes by members of the public.
“The existence of composed banknotes in the economy falsifies the true value of the currency in circulation, and can also be an avenue for fraudulent activities.
“Consequently, any composed banknote discovered in the deposit of DMBs shall attract a penalty of 400 per cent of the value.
‘’This circular takes effect from 1st April 2022.’’
It would be recalled that in April 2019, the apex bank introduced the Clean Note Policy to put an end to the regime of mutilated naira notes.
It defined mutilated notes as a poor quality banknote that requires a special examination to determine their value, adding that such bank note could be partially or permanently damaged by fire, water, dye, insects, rodents or destroyed by natural disasters.
The circular directed banks and cash processing companies making deposits at the apex bank to classify or sort their cash deposits into fit and unfit notes.
According to the circular, failure to do so will attract a penalty charge of N12,000 per box, or an amount determined by the apex bank.
It, however, stated that the CBN and the DMBs would continue to receive mutilated notes from the public.
