Commercial banks inNigeria sitting on as much as one billion dollars in their vaults which they cannot use should expect no help from the Central Bank, Governor Godwin Emefiele told Business-Day at the weekend.
For some of the banks, panic has already set in, but the apex bank says the commercial banks got into the predicament by choice and they would have to dig themselves out of the pit without help.
“Nigerian banks today are awash in dollar cash they cannot bring to the Central Bank because if the banks bring it to us, what is the Central Bank going to do with cash?” the governor asked. “If we were dealing with cash in naira, the banks are allowed to bring excess naira cash to the Central Bank and when they do this, we credit their account.
“ We cannot do the same for foreign currencies. It is what we call non-earning asset in banking and it is up to the banks to manage it.
“ The banks sent out circulars to their customers at the end of last week, saying they will no longer accept foreign currency deposits in cash and this movehas t he full support of the Central Bank.
Speaking in a wide ranging interview, his first sit-down and elaborate chat with a Nigerian newspaper, the governor said, “what we have started to see is that as a result of the speculative activities, as a result of round tripping activities, people haresorted to just the business of converting their naira into dollar, into what we call currency substitution.
“ Today, there is a large volume of foreign currency sitting in the vaults of the banks and the banks cannot handle it because it useless to them.”
The apex bank governor blamed the situation on Nigerians who have abandoned their own national currency, in pursuit of the dollar and the pound sterling.
He said, “I wonder why people will not have faith in their country, why people will want to take advantage of the situation that we are in as a nation to begin to speculatively attack the currency.
“If you and I and all other Nigerians prefer to store our values in the dollar or pounds, 170 million people store up their values in dollars, pound, Yuan, the Chinese currency, there will be chaos and it means we do not have faith in our local tender, it means you will have spiraling exchange rate, it means you will not have any reserves.”
Emefiele acknowledged that the situation the banks face today arose from the liberty given to bank customers to maintain domiciliary accounts in foreign exchange but he said this has been abused massively.
“I am not so sure how the policy of domiciliary accounts came about in Nigeria”, he said. “But I do know that this was meant to target exporters. For example if you are an exporter and you wanted to receive the proceeds of your export, this was an added incentive to encourage exporters to repatriate their foreign exchange proceeds.
“So that was how the issue of domiciliary account came into being. But we have seen every and anybody go to their banks, as they open a naira
account they also open a domiciliary account.
“What is the purpose? It is for them to convert naira into dollar cash and begin to store them or to collect illicit money and they think the best way to hide it is to open domiciliary account and they go on to deposit cash into their accounts.”
