CBN Slashes New Naira Allocation As Banks Battle Pressure

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CBN Slashes New Naira Allocation As Banks Battle Pressure

Ten days to the January 31 deadline set by the Central Bank of Nigeria for the old N1,000, N500 and N200 notes to cease being legal tender, it was discovered that the apex bank has reduced the amount it makes available to Deposit Money Banks from N4bn weekly to N700m.

It was gathered that before the introduction of the redesigned notes, each bank was allowed to load N4bn in its Automated Teller Machines across the country, but with the introduction of the new notes, the apex bank was now giving each of the banks N700m of the redesigned notes to distribute to branches nationwide.

This explains why the new notes have not circulated well as customers are still getting a mixture of old and new naira notes from their banks. However, a top official of the CBN said that the reduction was deliberate and meant to force bank customers to embrace alternative payment channels in place of cash.

A top banker told one of our correspondents on condition of anonymity on Friday, “Before the introduction of the new notes, each bank had available N4bn to disburse to customers through ATMs and across the counters on a weekly basis.

“However, the cash is drying up as each bank is now being given N700m weekly with the CBN directing that the money should only be loaded in ATMs and not dispensed over the counter. The truth is there is not enough cash in the banks as we are mopping up the old notes in order to beat the CBN deadline.”

When contacted, the Director, Corporate Communications, CBN, Osita Nwanisobi, simply said that “The old notes are still legal tender till January 31. Thank you.”

When pressed further, he said, “I am with some people now; I can’t talk to you further.”

However, a top official of the apex bank explained that the reduction of the weekly cash allocation to the bank was deliberate and was intended to force bank customers to embrace alternative payment channels so as to reduce the volume of money in circulation.

As a result of the reduction in the volume of cash available to them, it was learnt that the banks had been adopting fresh strategies to beat the deadline and not run afoul of the apex bank’s directive.

SUPERS gathered that the banks, which had been hoping that the deadline would be extended following pressure from their managing directors and other stakeholders, might have resigned to the new reality following the insistence of the CBN that the deadline remained sacrosanct.

It was learnt on Friday that some of the banks had sent signals to their branches to evacuate all old notes from their ATMs by Monday in order to beat the deadline given by the CBN.

This is a new development as bankers had hoped before now that the apex bank would extend the deadline since they could not meet up with the demands of their customers for the new notes.

The CBN governor, Godwin Emefiele, who was represented by the Director, Legal Services Department, Mr Kofo Salam-Alada, said during a sensitisation visit to the Computer Village in Ikeja, Lagos, on Wednesday that the commercial banks should approach the apex bank branches across the country to pick up the new naira notes.

He said the new naira notes were in the apex bank’s vaults awaiting pick up by commercial banks, adding, “We have been calling upon the banks to approach the Central Bank of Nigeria across the country to come and pick up the new notes; we have even waived some of the conditionality for accessing currency notes in order to accommodate the banks.

“The banks were being given slots before, but now the Central Bank of Nigeria is bending over backward to accommodate the demands of the banks in order to service them so that they can service you and so that everybody will have access to the new naira notes,”

A branch manager of a Tier-1 bank on Lagos Island said on Friday that, “Officials of the CBN have been visiting bank branches to monitor compliance with the directive that banks should load their ATMs with only new notes and asking some questions surrounding the redesigned notes.

“It is true that the apex bank has asked commercial banks to come to its offices in all states of the federation to pick up new notes for their customers, but CBN is pushing all the commercial banks to load their machines with the new notes. We have been mandated by our bank to evacuate all the old notes from our ATMs by Monday in order to beat the deadline given by the CBN.

“However, the situation on the ground is a little contradictory because our weekly allocation in some parts of our locations has not been met.”

The source added that due to inadequate supply of the new notes, what the branches had decided was to load the ATMs with whatever volume of the new notes that was made available to them, while the other machines would not be loaded at all or would not be loaded up to full capacity in order to avoid sanctions from the apex bank.

“We still don’t have enough of the new notes as communicated by the CBN. We have been keeping the few ones received from customers to load the machines. What I foresee is that some ATMs will not be loaded or not loaded to full capacity,” the branch manager added.

The manager added that his bank had developed a checklist for branch managers and those in operation to ensure compliance with the CBN directive.

The checklist listed the documents that the branches must file to include: “Balance of new currency notes in the branch at the close of business each day from January 10, 2023 to January 19, 2023, detailing the denominations and amounts.

“Schedule of new currency notes received daily in each branch from the CBN in the period January 11 to 19, 2023, detailing the various denominations and amounts.

“List of all ATMs maintained in the branch premises and their logs of loading and dispensing.

“Record of daily amounts loaded on each ATM from core banking application.

“Schedule of daily amounts dispensed by ATMs in each branch from January 11 to 19, 2023 analysed into various denominations, indicating the new notes component of the dispensed cash (denomination and attributable amounts).

“List of customers/accounts that withdrew from ATMs in the period January 11 to 19, 2023 detailed into old and new note recipients.”

On the implication of customers not getting the new notes a few days to the CBN deadline, a Lagos-based banker, “I foresee a situation whereby banking halls will from Monday be flooded by customers, who are desperate to get the new notes and some of them may become unruly if they can’t get what they want.

“It is also almost certain that there will be clashes when traders begin to reject the old notes before the deadline. Honestly, I foresee a crisis starting next week.

“The sensitisation being done by the CBN now is rather late. The bank started the campaign a few weeks before the deadline.”

An official in the corporate affairs department of a Tier-2 bank, who pleaded not to be named, said the lender had complied with the CBN directive by loading its ATMs with the new notes across locations, but added that more of N1,000 notes were being loaded as the lower denominations were not available.

The Deputy Director, Currency Operation, CBN, Dr Rekiyat Yusuf, admitted in Lokoja, Kogi State, on Friday that customers might besiege banks to dispose of old naira notes as the deadline draws near, adding that appropriate sanctions would be applied against banks found dispensing old notes to customers.