In a significant monetary policy shift, the Central Bank of Nigeria (CBN) has announced the lifting of restrictions on domiciliary accounts, granting account holders the freedom to make daily withdrawals of up to $10,000. The CBN made this disclosure in a press statement released on Sunday following an extraordinary Bankers’ Committee meeting.
The meeting, aimed at discussing the implementation and implications of the policy changes for the banking public, was focused on promoting transparency, liquidity, and price discovery in the foreign exchange (FX) market. The objective behind these changes is to enhance FX supply, discourage speculation, boost customer confidence, and ensure overall stability.
Under the new guidelines, ordinary domiciliary account holders will have unrestricted access to their funds. They will be permitted to utilize cash deposits, not exceeding $10,000 per day or its equivalent, via telegraphic transfer. Deposit Money Banks (DMBs) are required to provide returns to the CBN, including the purpose of such transactions.
The CBN’s directive provides further clarity to banks regarding operational changes in the FX market. Notably, the apex bank had recently confirmed the operational changes to the FX market, including the abolishment of segmentation and the consolidation of all segments into the Investors and Exporters (I&E) window. Consequently, commercial banks can now trade foreign exchange at any rate within the I&E window, based on willing buyer, willing seller arrangements.
In terms of practical application, the CBN clarified that applications for medical expenses, school fees, Business Travel Allowance (BTA), Personal Travel Allowance (PTA), and Small and Medium Enterprises (SMEs) will continue to be processed through deposit money banks. Furthermore, the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme will cease to exist from June 30, 2023.
The CBN, through its official Twitter handle, reiterated the operational changes to the FX market, highlighting that all eligible FX transactions must now be conducted exclusively through the I&E window. This market operates on the basis of a willing buyer, willing seller system, where entities in need of FX connect with those willing to sell at an agreed price, facilitated by authorized dealers.
