CBN to disburse lower currencies to microfinance banks

The Central Bank of Nigeria (CBN) has released guidelines for the disbursement of lower denominations of the naira to microfinance banks (MFBs) across the country.

A circular issued by Patricia Eleje, Director, Currency Operations Department of the Bank, in Abuja on Thursday, August 15, 2019, indicated 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. This, according to the CBN, was to ensure that only MFBs with good corporate governance practices take part.

Meanwhile, the participating microfinance banks must be willing to accept a mixture of new and other banknotes, and that the MFBs shall give 20 percent of any withdrawal in lower denomination notes subject to a maximum of N50,000.

Where beneficiaries withdraw more than once in a day, the circular said that disbursement will only apply to one transaction per day.

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Similarly, the MFBs are allowed to exchange notes subject to a maximum of N50,000 for customers with bank accounts and N10,000 for customers without bank accounts. In that situation, the banks must not exchange for same beneficiaries more than once a week.

Also, microfinance banks 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.

It, however, warned 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.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.