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Published On: Mon, Apr 10th, 2017

CBN battles banks over forex



The Central Bank of Nigeria (CBN) may soon come down hard on banks who deny customers foreign exchange for authorized transactions like Personal Travel Allowance (PTA), Basic Transport Allowance (BTA), foreign medical bills and student school fees.

A number of banks who spoke to Business Hallmark unofficially complained that the banking systems chief regulator had mandated them to obtain dollar denominated debit cards, where their forex demand were credited before requests of funding were granted.

Mr Bisi Afolabi who banks with First Bank told our correspondent that he was asked to get a dollar denominated debit card when he requested for PTA from his bank.

“They said they wouldn’t sell dollars to me unless I obtained a dollar-denominated ATM card when I demanded for dollars for my Personal Travel Allowance,” he disclosed in a telephone discussion in Lagos.

But Mr Babatunde Lasaki, head, media unit, Corporate Communications, First Bank refuted the claim, saying that the bank does not insist on customers obtaining dollar cards before their forex demands are meant.

He added that customers are only encouraged to get cards that would meet their specific needs if they demand more than the CBN’s authorized limit for a particular transaction.

The naira has been under pressure since global crude oil prices declined in 2014, but with prices picking up, the apex bank has since February 2017 sustained continuous intervention in the forex market.

It has so far injected over $2 billion in the market, which has caused the naira to appreciate against the US dollar rising from N525/$ before the interventions to N390/$ by mid-March, before falling again to N405/$ at the black market on Friday, according to Abokifx.com.

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Recently, the CBN instructed banks to sell forex to customers who need it for Personal Travel Allowance (PTA), Basic Transport Allowance (BTA), foreign medical fees and schools fees at N360/$.

Sola Salako, president and founder, Consumer Advocacy Foundation of Nigeria (CAFON) in a telephone interview said banks have refused to sell foreign exchange to retail customers unless they load the currency on their dollar debit cards.

“What they are trying to do is to exploit the customers, because the parallel market price is high, they want to maximize profit between what they get from the CBN and the parallel market rate. Since the CBN told them not to sell above certain price, they are now forcing customers to take their cards, so that instead of giving them cash, they load it onto their cards. And anytime the customer uses the card, they charge the customer. They are just trying to illegitimately maximize profit,” she said.

The consumer rights advocate noted that though the apex bank has directed customers to report such cases, it is not doing enough to protect the interest of customers.

Aminu Gwadabe, president, Bureau de Change Operators Association of Nigeria (ABCON) maintained that customers had been complaining that banks were not giving them options before loading their forex demands onto dollar debit cards.

“And the debit cards come with a charge, that is why customers run away from them. They don’t tell customers the charges beforehand. For instance, they charge as much as three dollar for a single withdrawal,” he stated.

But Dr Uju Ogubunka, president, Banks Customers Association of Nigeria (BCAN) said in a telephone conversation with Business Hallmark that he was not aware of this development, urging customers facing this challenge to complain officially to his association.

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Most banks who Business Hallmark spoke to denied forcing customers to obtain dollar cards as a condition for selling forex to them.

“There is no truth in it. Customers may be encouraged to get a dollar card but they are never mandated to get one. Some customers even ask for the dollar card for security reasons,” Abiodun Aderibigbe of Wema said in an e-mail response.

Isaac Okorafor, acting director, Corporate Communications Department, CBN said customers have been asked to report any bank which refuses to sell forex in cash to them through dedicated phone numbers and e-mail.

“We have issued a statement directing banks to pay cash to desiring customers and urging customers who are so denied to report to us,” he responded in a text message.

The naira lost 2.02 percent of its value of on Friday as it was sold for N405/$ at the parallel market instead of the N397/$ it traded the previous day.

It, however, appreciated 2.26 percent on Friday in the interbank market closing the week N307.63/$ compared to N 314.75 it was sold on Thursday, data on Bloomberg Terminal showed.

A faculty member, Lagos Business School and a finance expert, Mr Kayode Omoregie, in an exclusive interview with Business Hallmark said that the CBN intervention in the forex market was not sustainable, adding that speculators would win at the end of the day.


Naira spot rate verse parallel market rate

Source: Bloomberg/abokifx/Business Hallmark


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