CBN laments slow response of Nigerians to currency redesign, says N165bn so far received by banks

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BY BAMIDELE FAMOOFO

Uba Group

The Central Bank of Nigeria has said compliance with the policy of naira redesign and attracting back huge funds outside the banking system has not been encouraging so far.

The CBN at a press briefing in Abuja, on Wednesday, noted that just N165 billion has been deposited by Nigerians into the banking system as at November 18, 2022.

The apex bank had lamented that N2.73trillion of the total cash in circulation is outside the banking sector.

Governor of the CBN, Godwin Emefiele, in a speech announcing the policy to redesign N200, N500 and N1,000 notes in October, alleged significant hoarding of banknotes by members of the public, with statistics showing that over 85 percent of four currency in circulation are outside the vaults of commercial banks.

To be more specific, as at the end of September 2022, available data at the CBN indicate that N2.73 trillion out of the N3.23 trillion currencies in circulation, was outside the vaults of commercial banks across the country; and supposedly held by the public.

“Evidently, currency in circulation has more than doubled since 2015; rising fromN1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue,” the CBN had said.

Director, Currency Operations Department, CBN, Ahmed Bello Umar, warned that those who fail to comply with the directive of the Bank to deposit the cash in their custody in banks before January 31, 2023 will count their losses.

Explaining the rationale behind the policy of naira redesign, he noted that it is not meant to exchange the new notes for the old but to attract funds outside banks to the industry.

“Don’t get me wrong, this exercise is not to change old notes for new, but it is for the purpose of recovering funds outside the banks back to the banking sector. We will not make the mistake of returning the money back to outside the banking industry.”

Emefiele promised that the CBN remains committed to the seamless implementation of the initiative to ensure the achievement of its objectives to preserve the integrity of the local legal tender by reducing the significant amount of cash outside the banking system and its use in criminal activities, curtail counterfeiting, and promote financial inclusion, amongst others.

Whilst noting the progressive increase in financial access points and alternative banking channels over the years (electronic/internet banking, mobile apps, ATM, Cards/PoS, eNaira, agent banking, etc.), the Bank acknowledged that these may not be evenly distributed across all geopolitical zones and in some rural areas.

“In operationalizing this initiative, the CBN has been collaborating with relevant agencies and other stakeholders in the financial system in its execution, particularly ensuring that vulnerable citizens are not disenfranchised.

“Accordingly, the banking public in rural and/or underserved areas may access CBN branches in the 36 States of the Federation to enquire about options for depositing their current N200, N500, and N1,000 notes, wallet/account opening processes, financial access points, etc. Furthermore, agent locations across the country have been fully enabled for BVN registration, opening banking accounts/wallets & e-Naira wallets, electronic card distribution, and cash deposit, among others. Due to the policy, the agents have also been accorded priority to enable them to deposit cash collections through bank branches across the federation.”