By ADEBAYO OBAJEMU
Many Nigerians lack financial literacy, much worse, thousands do not know anything about benefits that accrue to businesses and individuals that have funded accounts with banks, such as access to loan facility.
Domiciliary account is sine qua non for businesses that receive or make payment in foreign currency.
The fact is that an individual or a business person, making and receiving payment in a foreign currency is much easier conducted through the domiciliary account. It is of great import to have a domiciliary account, especially in Nigeria where the economy is highly volatile and largely unstable, making it essential for people to save in a foreign currency as a way to protect their money from losing value .
For a layman, a domiciliary account is a type of current account that gives room for one to make and receive payments in foreign currency. It accepts foreign currencies such as euros, dollars and pounds.
The domiciliary account works like any other savings account. If it is a dollar account, the money will be sent in dollars, likewise Euro or pounds. You can also withdraw the foreign currency from your bank and either change it at bank rates in the bank or at the parallel market.
You can open a domiciliary account here in Nigeria, and conveniently operate it from any country of your choice and even within Nigeria. The purpose of opening a domiciliary account is not to save money but for transacting business. It helps you to carry out your business transactions using foreign currencies.
You can use a domiciliary account to transfer money to another country or receive foreign currency from another country.
Opening a domiciliary account gives you access to debit cards, internet banking, and mobile banking. So you can simply do your transfers, standing orders, payments, etc without going to the bank halls.
Benefits of Opening a Domiciliary Account
There are lots of benefits that come with opening a domiciliary account in Nigeria. Here are some of the benefits.
One of the benefits of domiciliary account is that it gives you the opportunity to keep money in global currencies that are very reliable; and, of course, gives you more control over unstable currencies.
It enables you to receive foreign currencies directly into your domiciliary account. You can use it to make payments for international transactions online via your Master cards.
You can easily serve as a referee for someone.
Downside of domiciliary account
Apart from the benefits in this type of foreign account, ironically, it also has a few downsides.
It’s worthy of note that the holder of a domiciliary account is limited to one type of currency per account. This means that you must have an account for every foreign currency that you want to make transactions with.
We should note that it is usually difficult to get a referee for this account. Banks accept only a person with a domiciliary account to stand as a referee as most people in Nigeria use either Naira savings account or current account.
One of the disquieting disadvantages is that the bank charges on the domiciliary account and transactions are quite high depending on the bank
Necessity for a Domiciliary Account
There’s no way one can avoid not owning a domiciliary account if one wants to start receiving money from abroad. One can seamlessly open a Dom account with most Nigerian banks and with it, you can:
Receive payment in foreign currencies (USD, EUR, GBP), transfer funds abroad and
get attractive interest rates and hedge against inflation.
With it one can effortlessly conduct both local and international transactions easily. This is a good option for people who do business internationally.
One can also use the account to purchase products on any online platform.
Opening a domiciliary account.
The requirements for opening a domiciliary account vary across different banks but are fundamentally similar. Here are the basic things that your bank will likely request of you.
The bank will require referees, that is two current account holders (preferably with the same bank) to sign the reference forms.
Duly filled domiciliary account opening form
They will also require an existing naira account with the bank. It can either be a savings or a current account. They will also need valid means of identification: Either an international passport, permanent voters’ card, National ID card, or a driver’s license. Opening the account requires passport photograph.
Utility bill issued within the last 3 months is also part of the requirements.
We should note that in addition to the aforementioned, different banks may require additional information from you but those listed above are the minimum requirements that will need to meet.