The Central Bank of Nigeria (CBN) is ready to provide Microfinance Banks (MFBs) across the country with lower denominations of the Naira to ease business transactions and enhance the entire economic system.
There has been severe scarcity of lower denominations of the Naira notes; these are five, ten, twenty, fifty and one hundred Naira notes in circulation. Thus, making it difficult to buy or pay for services without friction, especially among commercial transporters and traders.
However, the CBN said the exercise must adhere strictly to guidelines for the disbursement to ensure that only MFBs with good corporate governance practices take part.
A circular issued by the Director, Currency Operations Department of the Bank, Mrs. Patricia Eleje in Abuja on the issue emphasised that all microfinance banks must have a composite risk rating (CRR) of above average in the most recent Risk Based Supervision (RBS) target examination before they are considered for the scheme.
According to the circular, the participating MFBs must be willing to accept a mixture of new and old banknotes, and that the MFBs shall give 20 percent of any withdrawal in lower denomination notes subject to a maximum of ₦50,000. It added that where beneficiaries withdraw more than once in a day, the disbursement will only apply to one transaction per day.
It also stated that the MFBs are allowed to exchange notes subject to a maximum of ₦50,000 for customers with bank accounts and ₦10,000 for customers without bank accounts. In that situation, the banks must not exchange for same beneficiaries more than once a week.
According to the guideline, MFBs are to maintain a register of amounts received from the CBN through their correspondent commercial banks. The MFB must also maintain another register of the beneficiaries of the lower denomination notes as well as ensure that withdrawal teller slips contain breakdown of the denomination of the currency to customers with accounts.
However, it cautioned MFBs against hawking, hoarding or using of funds obtained under the intervention for any other purpose. It also instructed the banks to put in place effective control measures that will ensure that banknotes disbursed to customers with or without accounts are not sold.
Furthermore, the circular directed the banks to render weekly and monthly disbursement return to CBN branches where the intervention would be monitored periodically, and appropriate sanctions applied to erring MFBs.