CBN reverses policy on foreign remittances, orders banks to close naira ledger domiciliary accounts
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THE Central Bank of Nigeria (CBN) on Wednesday relaxed the rules on foreign remittances and domiciliary accounts by allowing beneficiaries to receive cash inflows in foreign currency.
This is coming on the heels of a circular signed by O.S. Nnaji, director of trade & exchange on behalf of the apex bank, stating the option would ensure transparency in the administration of diaspora remittances into Nigeria.
“These changes are necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora remittances into Nigeria.
“In addition, these changes would help finance a future stream of investment opportunities for Nigerians in the Diaspora, while also guaranteeing that recipients would receive a market reflective exchange rate for the market,” the statement read.
The CBN also directed banks in the country to close all naira ledger accounts opened specifically for the purpose of receiving proceeds from international money transfer operator (IMTO) with immediate effect.
It also confers agents of commercial banks in the country with the responsibility of making final payments to beneficiaries of domiciliary accounts holders in Nigeria either in foreign currency cash or through their domiciliary accounts.
Currently, a limit of $10,000 applies when a beneficiary wants to make a withdrawal of foreign currency cash deposits.
Last week the naira had exchanged at N500 to $1 but currently traded at N470 to the dollar on Wednesday.
For export proceeds, this circular warns exporters to use their forex proceeds for “legitimate” transactions and sell the rest in the Importers and Exporters window instead of selling on the parallel market.
The apex bank also noted that beneficiaries shall have unfettered access and utilisation to such foreign currency proceeds, either in cash and or in their domiciliary accounts.
Under the new guidelines, operators of export domiciliary accounts will continue to operate based on existing regulations which allow account holders use their funds for business operations only with any extra funds sold in the import and export window.
Also, operators of ordinary domiciliary accounts where accounts are funded electronically or wire transfer would be allowed unfettered and unrestricted use of these funds for eligible transactions.
And where accounts are funded by cash lodgments, existing regulation will continue to apply.