CBN Lifts Cash Deposit Restriction on Domiciliary Accounts, allows $10,000 Daily Withdrawals

 

By Nurat Uthman

The Central Bank of Nigeria (CBN) has lifted its restriction on domiciliary accounts while allowing account holders to make withdrawals of up to $10,000 on a daily basis.

The CBN disclosed this in a press statement on Sunday after deliberating at an extraordinary Bankers’ Committee meeting.

According to the press statement signed by the CBN’s director of the banking supervision department, Haruna Mustafa, the meeting was held to discuss the implementation and implications of the policy changes for the banking public.

“These policy changes aim to promote transparency, liquidity, and price discovery in the FX market in order to improve FX supply, discourage speculation, enhance customer confidence and ensure overall stability in the FX market,” the bank said.

“Ordinary domiciliary account holders shall have unfettered and unrestricted access to funds in their accounts.

“Domiciliary account holders are permitted to utilize cash deposits not exceeding USD$ 10,000 per day or its equivalent via telegraphic transfer. DMBs shall provide returns to the CBN including the “purpose” for such transactions.”

This development marks a significant shift in the nation’s monetary policy, allowing individuals greater flexibility in managing their funds held in domiciliary accounts.

The new directive provides further guidance to banks on the operational changes to the foreign exchange market.

Recall that the last Friday issued an update on the operational changes to the Foreign Exchange (FX) Market, explaining in detail how it works.

The CBN in an official statement signed by its Director for Financial Markets, Angela Sere- Ejembi confirmed the operational changes to the foreign exchange market.

The apex bank also affirmed that the abolishment of segmentation and all segments are now collapsed into the Investors and Exporter’, I & E window.

With that, the CBN in a way directed commercial banks to remove the cap on the naira at the investors’ and exporters’ window.

It simply means that commercial banks can trade foreign exchange at any rate in the Investors & Exporters window based on a willing buyer, willing seller arrangements.

Giving perspective to the operational charges of the foreign exchange market, Nigeria’s apex bank stated that applications for medicals, school fees, BTA/PTA and SMEs would continue  to be processed through deposit money banks.

It also announced the cessation of the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, effective June 30, 2023.

The apex bank on Friday via its Twitter handle, however, gave an update on the operational changes to the Foreign Exchange (FX) Market, explaining how it works.

“To collapse all segments in the fx market into the Investors and Exporter’, I & E window means all eligible FX transactions in the market shall only be done via the I&E window, all other windows cease to exist,” the CBN wrote.

“The I & E market functions by a willing buyer, willing seller system, where an entity with demand for FX seeks out another entity with FX to sell at an agreed price through an authorised dealer.

Meanwhile, the drastic change to the Foreign Exchange Market is coming amid the suspension of Godwin Emefiele as CBN governor by President Bola Ahmed Tinubu (BAT).

Recall that Tinubu during his inaugural speech as president on May 29 had pledged to unify the country’s foreign exchange market and boost investors’ confidence.