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CBN Warns Banks Against Rejecting Dirty Naira Notes

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The Central Bank of Nigeria (CBN) has put Deposit Money Banks (DMBs) on notice for rejecting dirty and mutilated Naira banknotes, a practice it deems unacceptable.

The directive, conveyed through a statement signed by CBN’s acting Director, Currency Operations Department, Solaja Olayemi, highlighted the apex bank’s resolve to enforce penalties outlined in a circular dated July 2, 2019.

According to the statement, the CBN has received numerous complaints regarding the refusal of deteriorated Naira banknotes by several DMBs across the country.

These rejections, the CBN emphasised, violate existing regulations and undermine efforts to maintain the integrity of the national currency.

“The Central Bank of Nigeria (CBN) has received several reports of rejection of dirty/mutilated Naira banknotes by some Deposit Money Banks (DMBs),” the bank said.

“Consequently, it has become imperative to remind DMBs that the CBN circular dated July 2, 2019, reference number COD/DIR/GEN/CIR/01/006, which prescribes penalties for the rejection of Naira banknotes, is still enforceable and binding on erring DMBs,” the statement reads.

The CBN further warned that it would not hesitate to impose severe sanctions on any financial institution found guilty of turning away Naira deposits under any pretext.

This includes penalties ranging from fines to more stringent regulatory actions, aimed at ensuring compliance with established guidelines.

Additionally, the CBN’s directive extends beyond domestic currency concerns.

On the same date, the apex bank also cautioned banks and authorized foreign exchange dealers against the selective rejection of old series and lower denominations of U.S. dollars.

The warning comes amidst findings from a recent consumer market survey conducted by the CBN, which revealed instances where such currency types were refused.

As part of its ongoing efforts, the CBN urged the public to report instances where banks refuse to accept Naira banknotes, emphasising that such actions undermine the central bank’s currency management objectives.

A recent circular issued by the CBN had also warned deposit money banks and authorized forex from rejecting old and lower denominations of United States (US) Dollar bills from customers.

The CBN said its directive stemmed from consumer complaints and market intelligence findings.

At the time, Olayemi also said that the rejection of old/lower denomination US Dollar bills by financial institutions is in direct violation of previous CBN Circular COD/DIR/INT/CIR/001/002 issued on 9th April 2021.

This circular explicitly mandates all DMBs and authorized forex dealers to accept all legal tender US Dollar bills for deposit from customers.

“We have observed a persistent trend where some banks and forex dealers are refusing to accept certain US Dollar bills, citing concerns over authenticity or condition,” stated Mohammed-J Olayemi. “This practice is not only contrary to CBN regulations but also disrupts the smooth operation of currency exchange in Nigeria.”

The CBN has also cautioned against defacing or stamping US Dollar banknotes, noting that such actions compromise the authenticity of the currency during processing and sorting.

The circular emphasised the immediate need for compliance with these regulations, warning of sanctions for non-compliance.

“We urge all relevant parties, including DMBs, forex dealers, and the general public, to adhere strictly to these guidelines,” Mohammed-J Olayemi added. “Failure to comply will result in regulatory penalties as stipulated by the CBN.”

The move by the CBN aims to ensure the integrity of currency transactions in Nigeria’s financial markets and to safeguard the rights of consumers holding legal tender US Dollar bills.

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