CBN's Operational Changes and Increased Withdrawal Limits in Nigeria's Foreign Exchange Market

Moving towards enhancing the efficiency and transparency of the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) issued a press statement on June 18, 2023. This statement serves as comprehensive guidance to Deposit Money Banks (DMBs) regarding the operational changes announced on June 14, 2023. The CBN's press release follows an extraordinary Bankers' Committee meeting, which sought to explore the implementation and implications of the policy alterations for the banking public.

CBN's Guidance to Deposit Money Banks

The overarching objective of the CBN's policy changes is to foster transparency, liquidity, and price discovery within the FX market. By improving the supply of foreign exchange, discouraging speculation, enhancing customer confidence, and ensuring overall market stability, these changes aim to revolutionize the FX landscape in Nigeria. The CBN emphasizes the pivotal role of these alterations in promoting a robust and efficient FX market that meets the needs of all legitimate users.

Unlocking Opportunities for Domiciliary Account Holders

The CBN highlighted several key points within its guidance, ushering in a new era of possibilities for domiciliary account holders and facilitating seamless transactions:

1. Inclusive Eligibility: The Investors' and Exporters' (I & E) window now encompasses all visible and invisible transactions, including medical expenses, school fees, BTA/PTA, airline payments, and other remittances.

2. Expeditious Processing: DMBs are mandated to ensure swift processing of all eligible invisible transactions on behalf of their customers, utilizing the applicable rates at the I & E window.

3. Unfettered Access: Ordinary domiciliary account holders now enjoy unhindered access to funds within their accounts, enabling them to manage their finances more conveniently.

4. Increased Withdrawal Limits: Domiciliary account holders can now withdraw or transfer up to USD$10,000 per day from their accounts, marking a significant departure from the previous restrictions and confusion surrounding withdrawal limits.

5. Cash Deposit Flexibility: Cash deposits into domiciliary accounts face no restrictions, provided that DMBs comply with proper KYC protocols, due diligence, and adhere to existing AML/FT laws and relevant regulations.

6. Enhanced Reporting: DMBs are required to provide returns to the CBN, disclosing the purpose of transactions carried out.

7. Commitment to Market Confidence: The CBN vows to prioritize the orderly settlement of any committed FX forward transactions, bolstering market confidence and reinforcing stability.

8. Equitable CRR Maintenance: The CBN will normalize its Cash Reserve Ratio (CRR) maintenance processes, ensuring fairness and equity in its implementation across the banking industry.

Streamlining Forex Transfers: Unleashing Flexibility and Convenience

The new guidelines signify a significant transformation in the realm of forex transfers for Nigerians. Individuals can now transfer funds from their domiciliary accounts to other domiciliary accounts, even if they belong to different banks. Previously, such transfers were restricted solely within the confines of the same bank, limiting flexibility and convenience for customers.

The CBN's press statement reaffirms its unwavering commitment to ensuring a stable and efficient FX market that caters to the needs of all legitimate users. These operational changes not only eliminate confusion and uncertainty surrounding domiciliary accounts but also empower Nigerians to leverage their  accounts for enhanced financial transactions and seamless forex transfers. With these comprehensive reforms, the CBN sets the stage for a more dynamic and customer-centric banking ecosystem in Nigeria.