On 20th April, 2021, the Central Bank of Nigeria (CBN or the "Apex Bank") released a Notice directing all Deposit Money Banks (DMBs) and authorized forex dealers to stop the rejection of old/lower denominations of United States Dollar (USD) bills. This Directive results from numerous complaints by members of the public on the rejection of old/lower denominations of US Dollar bills by DMBs and other authorized forex dealers.
According to the Notice, all DMBs/authorized forex dealers should henceforth accept both old series and lower denominations of the USD that are legal tender for deposit from their customers. The Notice also stated that the CBN will not hesitate to sanction any DMB or other authorized forex dealer that refuses to accept old series or lower denominations of the USD bills from their customers.
The Apex Bank also advised all authorized forex dealers to desist from defacing or stamping USD bank notes as such notes always fail authentication tests during processing or sorting. Also, there was an emphasis on immediate compliance.
Implication
The immediate compliance requirement of this directive will enable members of the public who are customers of these organizations perform their financial transactions easily. However, this raises concerns for the authorized forex dealers whose worries for accepting old series or denomination are centered on valuation and profits. The CBN Directive to sanction banks on failing to collect old/stamp foreign currency cash notes over the counter is a measure taken at the right time especially now that foreign currency inflow and liquidity is low. The measure will go a long way to discourage hoarding and improve liquidity in the market. It is therefore a bold step from the part of the CBN to ensure availability of the foreign currency notes in circulation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.