The Central Bank of Nigeria (CBN) has announced tough penalties for banks found to be involved in the illegal distribution of Naira notes to currency hawkers.
In a bid to curb the growing practice of Naira abuse, the CBN has introduced new measures to hold banks accountable for the improper handling of mint banknotes.
Mr. Solaja Olayemi, the Acting Director of the Currency Operations Department at the CBN, made the announcement in a memo sent to Deposit Money Banks (DMBs) on Friday, November 16, 2024.
The memo outlined the penalties banks would face if found complicit in supplying Naira notes to hawkers.
Tough Measures to Tackle Naira Abuse
According to Olayemi, the CBN will implement “mystery shopping” exercises and conduct periodic “spot checks” on banks to track the flow of Naira notes.
The aim of these initiatives is to uncover the source of mint banknotes found in the hands of currency hawkers.
Olayemi emphasized that the measures are designed to ensure responsible cash disbursement practices, especially as the festive season approaches and cash demand typically rises.
“The CBN will focus on ensuring that banks engage in responsible cash distribution, preventing any actions that facilitate the flow of mint banknotes to hawkers,” Olayemi said.
Penalties for Banks Found Guilty
The CBN’s tough stance includes significant financial penalties for any bank found to be involved in supplying Naira notes to hawkers.
Banks will face a 10% penalty of the total value of any cash withdrawn from the CBN that is later seized from hawkers.
The penalty will be applied on the day the seized cash was withdrawn from the central bank.
Furthermore, any subsequent violations will result in an incremental penalty of 5% for each repeated offense.
“The penalties will escalate with each offense to ensure accountability and discourage further violations,” Olayemi explained.
Banks found to be involved in cash hoarding, diversion, or any activity hindering efficient cash distribution will also face appropriate sanctions. This includes violations of the CBN’s Clean Note Policy, which sets guidelines for the quality and handling of currency notes.
A Call for Accountability in Cash Disbursement
As the holiday season approaches, the CBN has urged banks to step up their efforts in ensuring that cash disbursement is done in an accountable and responsible manner.
Olayemi emphasized that banks should prioritize the use of Automated Teller Machines (ATMs) to meet the public’s increased demand for cash.
“The CBN encourages banks to ensure that the majority of their cash distribution is done through ATMs to reduce the chances of human error and prevent the abuse of Naira notes,” he said.
The CBN is also preparing for an increase in cash demand during the upcoming holiday season and intends to monitor cash distribution closely to prevent any irregularities.
CBN’s Partnership with Law Enforcement
In its efforts to tackle the issue of Naira abuse, the CBN is collaborating with law enforcement agencies.
Olayemi confirmed that the central bank would work alongside relevant authorities to intensify its spot checks and mystery shopping activities across the country.
These activities aim to ensure that banks are following the guidelines set out by the CBN and are not engaging in practices that could harm the integrity of the Naira.
“We will be stepping up our monitoring efforts, particularly as we enter the holiday season, to ensure that banks are complying with the rules and that the public has access to cash in a responsible manner,” Olayemi stated.
Protecting the Integrity of the Naira
The CBN’s crackdown on banks involved in currency hawking comes amid growing concerns over the abuse of Naira notes.
In recent years, currency hawking has become a major issue in Nigeria, with many citizens resorting to buying and selling Naira notes for a profit. This practice undermines the value of the currency and contributes to inflation.
By targeting banks that facilitate the hawking of Naira notes, the CBN aims to restore confidence in the Nigerian currency and ensure that the Naira maintains its value.
The central bank’s measures are also part of a broader effort to improve the management of Nigeria’s cash supply and prevent any illicit activities related to the currency.
A Call for Responsible Banking
As the CBN works to curb the abuse of Naira notes, it has urged banks to implement internal controls that promote responsible cash disbursement.
“We want to see more accountability in the distribution of Naira notes. Banks must ensure that they are not part of the problem and that they contribute to the efficient flow of cash,” Olayemi said.
The central bank’s new initiatives are part of its ongoing efforts to combat currency-related crimes and maintain the stability of Nigeria’s financial system.
As the holiday season draws closer, the CBN’s vigilance will be key in ensuring that cash distribution remains fair and responsible, and that the Naira is protected from further abuse.
