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CBN to sanction commercial banks for Forex infractions, assures of improved liquidity

Mr. Folashodun Shonubi, Acting Governor of CBN

*Folashodun Shonubi, Acting Governor of the Central Bank of Nigeria, stresses the importance of strict steps to restrict banks’ illegal remittances to maximise the country’s economic growth, assuring the government and consumers of improved liquidity in the Forex market in few days ahead

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has alleged the Deposit Money Banks (DMBs) are involved in diversion of Foreign Exchange (Forex) to unapproved channels to shortchange genuine consumers of financial products and services.

The Bankers’ Bank said it would will deal with erring commercial  banks engaged in illegal sale of Forex in the Nigerian economy.

Mr. Folashodun Shonubi, Acting Governor of CBN, stated this while delivering a lecture titled, “Diaspora Remittances and Nigerian Economic Development”, in Abuja, FCT, report noted.

The Bank is making the move to sanction the DMBs for the infractions against the backdrop of the current crash of the Naira to over N950 to a US Dollar in the parallel market, just as Forex scarcity worsens in the country.

Besides, a barrage of allegations is also  preferred the commercial banks that are diverting Forex to the unofficial foreign exchange market rather than selling to their customers.

Shonubi also stated the importance of strict steps to restrict illegal remittances and channel them via appropriate means to maximise economic growth.

The CBN Chief said: “The need to name and shame commercial banks involved in such malpractices.”

He as well highlighted the shortcomings of the present remittance system.

Shonubi estimated that the cost of transferring money to Sub-Saharan Africa from the Diaspora at about nine percent of every $100, which is described as the highest worldwide.

He, however, said that Nigeria received about $16.7 billion in remittances, with the vast majority of the money outside the official Foreign Exchange market.

The Acting Governor of CBN noted: “We are working hard to encourage individuals to bring money into the formal sector rather than relying on informal channels, which have become difficult to manage.”

According to him, despite efforts at inducing individual consumers to engage in formal market transactions by granting a N5 refund through its Naira 4 Dollar scheme, the policy remained ineffective, prompting the N5 rebate to be discontinued.

Nonetheless, Shonubi acknowledged the usefulness of incentives in attracting consumers to the formal Forex market in Nigeria.

CBN will improve liquidity in Forex market -Shonubi

In a related development, the Acting CBN has assured Nigerians that Bank will be taking steps to improve the liquidity in the foreign exchange market in the next few days.

Shonubi stated this Monday, August 14, 2023, after meeting with President Bola Ahmed Tinubu, at the State House, Abuja, FCT.

Speaking on the current developments in the market and its impact on consumers, he shared his belief that the changes in the market are driven mostly by “speculative demand”.

He, however, said he was confident that the steps that would be implemented to significantly impact the Forex market soon.

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