The Central Bank of Nigeria (CBN) is planning to embark on a project that would enable mop-up of the over-circulated and mutilated banknotes from circulation, its governor, Godwin Emefiele said on Tuesday.
Mutilated banknote is a local currency note that is passively or permanently damaged. In other words it is a banknote that has become dirty due to usage.
Nigeria’s currency-in-circulation rose by 5.39 percent year-on-year (y-on-y) to N2.15 billion as at March 31, 2019 from N2.04 billion in March 31, 2018, data obtained from the CBN show.
On a quarter by quarter basis, currency-in-circulation declined by 4.02 percent from N2.24 billion in February 28, 2019 to N2.15 billion at the end of March 31, 2019. The CBN no longer prints its currency abroad.
Emefiele, who spoke at the unveiling of the Clean Notes Policy and Banknotes Fitness Guidelines in Lagos, did not give the time for the mop-up of the unfit naira notes but said the Bank would continue to embark on sustainable institutional reforms and enact policies that will promote efficient currency management in Nigeria.
Represented by Ade Shonubi, deputy governor, operations, he said the effective use of these documents by relevant stakeholders would ensure that banknotes in circulation are clean and of high quality.
He mentioned some key policy measures being pursued by the Bank towards promoting effective and efficient currency management in Nigeria.
Consequently, the CBN has registered eight companies to carry out cash-in-transit (CIT) and two cash processing companies to operate in Nigeria. Deposit money banks (DMBs) are expected to patronize only these registered companies for CIT and sorting services.
He said more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes.
“I wish to use this opportunity to inform the industry that the Central Bank of Nigeria, as part of its effort towards devolving the retail cash management to the private sector, has approved the revised guidelines for registration of CIT/CPCs”, Emefiele said.
These guidelines he said provide for the operation of CITs and CPCs at both National and Regional levels, hopping that this would encourage unregistered companies to come under the regulatory purview of the Central Bank and ensure a nationwide coverage of these services.
The Bank has also put in place strategies to enable direct disbursement of lower banknotes to various market associations and merchants through their respective Deposit Money Banks (DMBs). The intervention commenced in Abuja and has been extended to Lagos, Kano, Enugu, Umuahia, Yola, Jos, Gombe, Asaba, Ibadan, Kastina, Uyo, Minna and Port Harcourt.
Furthermore, the Bank reduced the processing charges for DMB deposit of lower denomination banknotes (N5 – N50) to encourage the return of unsorted banknotes to CBN for processing.
“We will continue to sustain our engagement with key stakeholders, to enable us gain insight into the various challenges that end-users face while processing the banknotes. I assure you that all suggestions that will help improve currency management operations would be duly considered. Consequently, the two policy documents would be reviewed periodically under the NCMS, in liaison with key stakeholders”.
“I will like to seize this opportunity to urge Nigerians to handle the Naira banknotes properly; as it is a criminal offence to abuse the Naira. Moreover, the Naira is our identity as a country, so we need to respect it”.
Priscilla Eleje, director of currency operations, CBN, said the Bank has increased its surveillance and will continue to monitor the banks for counterfeit, adding that banks detected for counterfeits would pay fine of N1 million.
She banks are expected to place a banner in their banking halls to enable the customers understand their rights.
Eleje said the banks should accept mutilated banknotes from customers and return same to CBN for destruction.
Addressing the participants at the unveiling forum, Dipo Fatokun, director, banking services department, said the objective of the two documents unveiled is to ensure banknotes in circulation are clean and of good quality.
He said for the CBN to continue in this journey of clean notes, there is need for collaboration of all stakeholders.