LAGOS — Indications emerged, yesterday, that banks in the country are now in
a dilemma on what to do with an estimated $5 billion that is currently idle in
their vaults.
Banks, it was gathered, have their vaults full of dollars that they do
not know how to dispose them. It is funds they can neither lend to other banks
nor sell to CBN, and the only option open to them is to sell.
Bank foreign exchange officers, who spoke to Vanguard. said that
as of today, no bank will buy dollar from anybody. The source said it is not
for any other thing but the fact that the banks have more than enough in their
vaults.
The dollars being sold by banks for BTA and PTA, they say, have no
direct relationship with the foreign reserve, hence the marginal increase in
the nation’s external reserve despite continued downward trend in crude oil
prices.
Vanguard gathered that banks have been pleading with the
CBN to allow them sell off their dollar holdings when the apex bank could not
supply enough dollars to fund customers’ request for BTA and PTA. It was learnt
that when the CBN finally gave its nod recently, the banks immediately called
on their customers and the public to buy Basic Travelling Allowance from
designated banks.
Vanguard learned that there is more than $5 billion
within the economy that are still in the hands of individuals outside the
banking system.
It also learned from top bankers that before the general elections,
there was scarcity of foreign exchange in the banking system and that banks
were allocated about $30,000 for sale to customers that requested for BTA,
which was grossly inadequate for most banks.
He said immediately after the election, banks started receiving dollar
deposits in millions per day. This, he said, was done mainly by politicians,
who got dollars during the electioneering campaign, which resulted in banks’
vaults stocked with dollar deposits that can neither be given out as loans nor
transferred as it would be regarded as money laundering.
A bank customer, who used funds from a domiciliary account to support
his ward’s visa application before the glut of the dollar in the system, said
the bank made it clear it could not transfer the fund from the child’s
domiciliary account to the parent’s account after the visa was secured.
The parent said the bank added that if the child travels abroad, the
fund cannot be withdrawn by the parent even if the child had already signed a
withdrawal form for the parent’s use when the money is needed.
Banks refuse to accept dollar cash deposits
Banks are now refusing to accept any form of dollar cash deposits and
even insist that transfer from one domiciliary account to another in the same
bank will be regarded as a form of cash deposit that regulators will frown at.
According to them, the rules are now very stringent and no bank wants to
be on the wrong side of the law. In one of the banks, Vanguard learned
that no local bank will undertake to do transfer for Nigerian parents whose
wards are in schools abroad which accommodation are not directly linked to the
school.
Nigerian banks, they added, will also not do a third party transfer.
Unfortunately for many Nigerian parents whose wards are enrolled in masters’
programmes in the United Kingdom, many universities in the UK do not provide
direct accommodation for second degree students and such students have to
contract accommodation with property owners.
Situation worrisome
The situation has become worrisome to many as those who attempted to
change huge sums at the unofficial market were given rates they considered
ridiculous.
A roadside forex dealer told Vanguard that they do dollar
exchange transactions for desperate Nigerians at the rate of between N198 and
N203 to the dollar whereas they sell at N225 to the dollar.
Vanguard gathered that many parents with genuine need of
transfer to pay for student accommodation in London are desperately looking for
alternative means.
A parent, who spoke to Vanguard, said the new policy has created
a new form of business for some Nigerians living abroad who are now exploiting
the situation. He said that those who have pounds and are living in London
sometimes do agree to help pay for student accommodation but ask for an exchange
rate of N358 to the dollar.
It will be recalled that the Central Bank of Nigeria, CBN, recently
proscribed acceptance of forex cash deposits by banks operating in the country.
Forex market now segmented into four layers
Reacting to the ban, Managing Director, Financial Derivatives Company
Limited (FDC), Mr. Bismarck Rewane, in his monthly economic news and views
entitled, “Market versus Economy,” presented at the Lagos Business School’s
executive breakfast meeting, said: “The forex market is now segmented into four
layers. The differential between the segments will widen as the ability to move
between segments becomes more difficult and risky.
“The desperation for electronic dollars will push that market to N250.
Cash dollars will be at N240. The magnitude of the currency value adjustment
will be dependent on when the subsidy is removed.”
He listed them to include the interbank foreign exchange market (IFEM),
the BDC rate, rate at which exchange proceeds are converted into Naira and
electronic transfer rate.
He said: “The electronic transfer rate and the cash rate were the same
before. But now, banks will not accept dollar cash again. When I get dollars,
for me to transfer it is going to be too costly.”
The CBN in an advertorial in several newspapers had, however, reiterated
that all legitimate requests for foreign currency for eligible transactions,
normally referred to as “invisibles,” such as remittances for school fees,
student maintenance allowances, BTA, PTA, medical and other eligible
transactions, shall be fully met at the official/interbank exchange rate.
A statement from the CBN stated that already all the legitimate demands for
such transactions through recognised channels have been fully met by CBN.
According to the statement, “the CBN hereby directs all authorised
dealers in foreign exchange in Nigeria to henceforth treat as top priority all
legitimate demand for foreign exchange for eligible transactions.
“The CBN once again advises individuals that wish to source foreign
currency for such eligible transactions to approach their banks with their
legitimate demand as the CBN has made adequate provisions of foreign currency
for all such legitimate and eligible purposes.
“Furthermore, holders of Naira-denominated debit and credit cards shall
continue to have access to the use of their cards at ATM machines in any part
of the world but subject to the annual limit of $50,000. ATM withdrawals shall
continue to be a maximum of $300 per day.”
In a related development, Guaranty Trust Bank Plc (GTBank),
informed its customers of its decision to reduce the daily international
spending limit on their Naira MasterCard to $300.
Vanguard Finance: By Omoh Gabriel, Business Editor
