Forex Scarcity: Banks Pay Naira For Foreign Exchange Inflows

Proshare - Facebook Proshare - Twitter Proshare - Linked In Proshare - WhatsApp

By Marcel Mbamalu,

Despite efforts by the CBN to protect customers from being unduly exploited in their daily transactions with banks, unwholesome practices and hidden charges may have returned to the banking sector, howbeit through the backdoor.

In what looks like an effort to conserve the already scarce foreign exchange, and shore up revenue in the face of current global economic challenges, some banks may have resorted to forcing their customers to claim foreign currency sent through Western Union and other means of transfers in Naira terms, a new development considered unethical by experts.

A check on the operations of some of the banks, during the week, revealed that some customers, who received money from abroad, were practically compelled to claim same in Naira.

Also, interest rates may have jumped to over 30 per cent, especially when other fees, including \'management charges\' are factored in.

However, some bank officials contacted at the weekend, denied the development, insisting that most transfers, particularly those of Western Union, are usually foreign currency-denominated.

\"It is not true. Any customer who experiences that in any of our branches should write the head office,\" said an official of Access Bank Plc.

There were serious concerns that, to checkmate the activities of end-users who cut corners on foreign exchange procurement, the CBN may have perfected plans for strict monitoring of domiciliary accounts held in the banks.

Although, the apex bank could not confirm this, one of its officials yesterday said the regulatory body would come out with new guidelines aimed at tightening the noose on those who default on already existing rules.

On the issue of scarcity of forex and banks short-changing customers, the CBN official, in a telephone chat, said the rules had not changed.

\"We are also coming out with new guidelines of foreign exchange next week. We cannot fold our hands and watch things go bad. Look at Russia; in less than six weeks the country lost one-quarter of its foreign reserves. We need to discourage imports because if imports are cheaper, it will affect local industries.

Foreign exchange market has remained lean generally due to what industry watchers view as the failure of the CBN to measure up to the pressure of demand at the new Retail Dutch Auction System (RDAS), culminating in a near-desperate moves at both the official and the parallel markets.

The new system, which traces demand to individual requisitions and transactions, also seals the lid on inter-bank trading, hence limiting banks\' access to forex.

Even Bureaux de Change and the black market, last week, experienced serious shortfall in supply of forex, a development experts attributed to the Eid-el-Mauloud celebration, which prevented last Monday\'s auction at the official market.

In reaction to the allegations of hidden charges by Nigerian banks, and to ensure transparency in their operations, the CBN had, last month, initiated the process of publishing the total interests and charges obtainable in each of the banks.

But the banking public still allege that the malaise is yet to disappear, especially in the light of banks\' current dilemma over the economic crisis and the Bankers\' Committee-endorsed uniform end-of-year results, which could expose the shortcomings of some of the banks.  The Guardian

Related News