CBN Gives New Instruction to Zenith, GTB, Access, Others on Dollar Payment for Travel, Business
- The central bank has told banks to discontinue paying cash for payment of personal and business travel allowances
- It stated that this is in line with the CBN's commitment to ensure transparency and stability in the FX market
- This followed earlier limits it imposed on how much banks can hold in foreign currencies, amongst other recent policies
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
The Central Bank of Nigeria has instructed Nigerian banks to stop paying customers personal and business travel allowances in cash.
Source: UGC
It said this in a circular signed by Dr Hassan Mahmud, director of the trade and exchange department.
The apex bank said that the payments— including through debit or credit cards – will now be through electronic channels only.
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It stated:
“Memorandum 8 of the foreign exchange manual and the circular with reference FMD/DIR/CIR/GEN/08/003 dated February 20, 2017, stipulate the eligibility criteria for accessing personal and business travel allowances (PTA, BTA).
“In line with the bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, all authorised dealer banks shall henceforth effect payout of PTA, BTA through electronic channels only, including debit or credit cards.
For the avoidance of doubt, it stressed that “payment of PTA/BTA by cash is no longer permitted.”
The bank also advised authorised dealers and the general public to note and comply accordingly.
Recall that the CBN also recently imposed limits on how much banks can hold in foreign currencies.
The CBN expressed concerns about the growth of forex exposures on their balance sheets as the naira depreciates against the US dollar.
With the depreciation of naira more Nigerian banks created an incentive for banks to hold excess long foreign currency position and CBN is worried.
Charles Abuede, a financial analyst opined that the CBN may be experimenting with various models to ensure fx stability and appreciation in the naira value until it gets it right.
He added,
"It could further be seen as a means to clip wings of BDCs and other fx traders as the willing buyer and willing seller model comes into full force and takes away the spread being earned by these traders."
"In my view, I think the CBN is already on the move to attain positive application of policy tools to ensure naira stability and further encourage other forms of price discovery in the near term. However, the jury is out there to see if the policy direction of the apex bank is effectively applied for the naira defence."
CBN moves to protect banks' customers
Legit.ng also reported that the CBN instructed Nigerian financial institutions to display their corporate names on all their online business platforms, which include websites, portals, and mobile apps.
The directive affects banks, payment service providers, and international money transfer operators.
The CBN gave the directive in a circular signed by Haruna Mustafa, the CBN’s financial policy and regulation director.
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Source: Legit.ng
