As the three-month grace period handed down to stakeholders to rid the system of mutilated banknotes ends on tomorrow (Monday), investigation has revealed that many banks have capitalised on customers’ ignorance of the deadline to shun the clean note policy of the Central Bank of Nigeria (CBN) and continue to fuel the circulation of dirty and mutilated naira notes across the country.
According to the President of the Bank Customers Association of Nigeria (BCAN), Dr Uju Ogubunka, it is possible that most members are not aware of the directive because of power supply problem which may have made it impossible for them to listen to news on radio or television.
He added: “Some of our members we spoke to said they are not even aware despite all the messages and the public sensitisation. Looking at it from the point of view that we have 180 million Nigerians. We have about 70 to 80 per cent of them with bank accounts. One could imagine that some people may not be aware.”
Can the banks rid the system of unfit notes? “It will be temporary. Temporary in the sense that transactions are always ongoing thing. As banks collect unfit notes, and give out new ones, there is no assurance that the new ones would not be mutilated at some time. So, exchanging unfit notes for new ones should be an ongoing thing.
For Aminu Gwadabe, the president of Association of Bureax de Change Operators of Nigeria (ABCON), there was no complaint from his members that banks don’t replace unfit notes from them since his members hardly deal with physical cash again.
“To a large extent, our members are doing their transactions through bank transfer. So, gone are the days we carried cash everywhere. We have been sensitising them anyway that whoever has mutilated notes should take them to the banks for exchange. So far no complaints from any of them that banks are rejecting it. I think the banks on their own are trying because for some time now, I have not been seeing mutilated notes from some of the money brought by our customers”, he said.
A message form one of the branches of GT Bank on Friday read: “Dear customer; important CBN notice on naira notes. As part of its efforts to improve the overall quality of the naira notes in circulation, the Central Bank of Nigeria (CBN) has introduced the Clean Note Policy and Banknotes Fitness Guidelines. What does this mean for you?
“If you have in your possession, overused or mutilated naira notes, you are required by the Central Bank of Nigeria (CBN) Clean Note Policy to deposit such notes at any branch near you on or before Monday, September 2, 2019.
“Please note that overused notes include any naira note that is now weak to such an extent that it could easily tear at further handling or processing. Mutilated notes include any naira note that has been partially or permanently damaged, but which clearly still has more than half of its original size together.
“As Nigerians, it is our patriotic and collective responsibility to handle the naira with care, and as your bank, we urge you to comply with this directive in order to improve the quality of our national currency. Thank you for banking with us.”
However, Sunday Sun investigations showed that many banks across the country are not complying with the CBN’s directive. In fact, their customer service personnel and cashiers at various branches said they were not replacing mutilated naira notes.
Reacting to this in a chat with Sunday Sun, CBN’s Director of Currency Operations Department, Mrs Patricia Eleje, queried:
“Why are the banks not giving out new notes? We sent them circular and it was spelt out clearly. Banks are supposed to continue taking the old notes and exchange them for new notes so that we can get them out of circulation. At the expiration of the deadline, banks are supposed to continue to receive old and mutilated notes from their customers. So there is no reason any bank should not take them from customers. If they do, we have channels through which customers can forward their complaints.”
Recall that last April, miffed by the large proportion of dirty and mutilated banknotes in circulation, the apex bank rolled out two documents: Clean Note Policy and Banknote Fitness Guidelines.
Its Director of Banking and Payment System Department, Mr Dipo Fatokun, explained that the clean note policy document provides the uniform standard for the circulation of only clean and fit bank notes in the country while the banknote fitness guidelines provide the industry with clear and acceptable criteria for determining the quality of notes in circulation.
“The unveiling of the two frameworks was the first step to address the sorry state of the notes in circulation and create a new culture for better handling of the currency,” CBN explained.
The policy guidelines, the regulator said, were developed after extensive collaboration and engagements with key industry stakeholders under the auspices of the Nigerian Cash Management Scheme, a Bankers’ Committee initiative.
“The plan will ensure that unfit, dirty, mutilated and counterfeit banknotes are not in circulation. This is pursuant to Sections 18, 20 & 21 of the CBN Act 2007 which prohibits the counterfeiting, sale and abuse of the naira,” it explained.
At the launch of the documents in Lagos, the CBN Governor, Godwin Emefiele, who was represented by the Deputy Governor in charge of Operations, Mr Folashodun Shonubi , explained that the ‘responsibility for clean notes in circulation is not exclusively that of the Central Bank.
He said that it is “rather a collaborative effort between the Central Bank, banknote suppliers, deposit money banks (DMBs), manufacturers of currency management equipment, currency transportation and processing companies, security agencies, and the general public.”
On what the apex bank is doing to make clean naira note part of daily life of Nigerians, he said: “Currency management is vital to our daily lives because despite the improvements in electronic payments system, banknotes remain predominant for payment and settlement of commercial transactions in Nigeria. The bank has registered eight companies to carry out cash-in-transit and two cash processing companies to operate in Nigeria. Deposit money banks (DMBs) are expected to patronise only these registered companies for CIT and sorting services.
“It is expected, therefore, that more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes.”
In her presentation, Mrs Eleje, said that despite the huge volume of CIC and its attendant challenges, the CBN remained committed to ensuring that the nation has fit notes in circulation.
Also alluding to the incentives for banks to bring in bad notes, she said: “We would give a timeframe by which banks would need to bring all mutilated bank notes to us for replacements and we would do it in a way that they would be encouraged to bring them forward.”
She also added that ATMs are expected to have only mint and close to mint dispensed, which the guideline stipulates as Level 1 and Level 2.
She also urged banks to increase sorting of mutilated notes to the CBN to retrieve the cleaner notes.
On sanctions, she said: “There would a penalty for counterfeits from ATMs and it is currently N1 million for counterfeits detected via ATMs or across the counters.”
However, there were indications last Thursday that the commercial banks were not complying with the Central Bank of Nigeria’s directive on the replacement’s of mutilated naira notes with new ones.
The guidelines state that the document is intended for the use of all cash handlers such as Deposit Money Banks (DMBs); micro finance banks, third party service providers and general public. All cash handlers are expected to comply with the quality standards as set therein to sustain public confidence in the national currency.