CBN Moves Against Banks Over Forex Withdrawal Restrictions

The Central Bank of Nigeria (CBN) is set to intervene over complaints that some commercial banks are restricting customers’ access to cash in their domiciliary accounts.

Financial Vanguard gathered that the apex bank is considering measures to ensure that banks honour legitimate foreign currency withdrawal requests and provide customers with the currencies they are entitled to withdraw.

Customers across the country have reported different forms of restrictions, ranging from withdrawal limits to claims that US dollars and British pounds are unavailable.

Investigations by Financial Vanguard in some Lagos banks showed that the practice exists to varying degrees. Customers in other parts of the country have also complained about similar restrictions.

At some banks, customers are reportedly limited to specific amounts per transaction. Others say they have no foreign currency available, while some offer only lower denominations.

Customers have alleged that offering denominations such as $20 notes could make withdrawals unnecessarily difficult and discourage account holders from completing their transactions.

At one old-generation bank, a correspondent requesting $5,000 was told by a teller that only $3,000 could be dispensed. The teller also said he was unsure whether the customer would be able to withdraw as much as $3,000 if he returned the next day.

At another new-generation commercial bank, a teller said: “US dollars are not currently available, but you can keep following up. Maybe you will be lucky next time.”

A customer who heard the same response told Financial Vanguard: “I think they are keeping it for some of their special customers. One of my friends told me to come here because he just collected $4,000 today.”

Meanwhile, at another new-generation bank on Victoria Island, Lagos, a teller said US dollars were unavailable, even as a customer told Financial Vanguard he had just withdrawn $1,000.

According to the customer, $1,000 was the maximum amount that could be withdrawn over the counter in US dollars, with the restriction attributed to the scarcity of the currency.

CBN receives complaints

A source close to the CBN told Financial Vanguard at the weekend that the apex bank was aware of the complaints and was working on measures to address the situation.

The source described the reported practice by some banks as illegal and said the CBN had received several complaints from members of the public.

The source said: “The Central Bank of Nigeria has received several complaints from the general public alleging difficulties in withdrawing cash from their domiciliary accounts, even when withdrawals are made in accordance with the applicable requirements for the operation of their accounts.

“These complaints include reports of practices and arrangements that may impede the timely and convenient fulfilment of legitimate withdrawal requests.”

The source further said: “They know what they are doing. They know that CBN would frown at their illegal withholding of customers’ foreign currency.

“So they will offer the lower denomination that you cannot accept and thereby blame you for the failure of the transaction.”

Circular expected

The source indicated that an investigation was ongoing and that the CBN could soon issue a circular directing banks “to desist from practices that unnecessarily restrict or delay legitimate cash withdrawal requests, which create an impression of banking distress.”

Banks would also be directed to review their existing practices and take immediate steps to ensure that legitimate withdrawal requests are properly honoured.

Banks accused of using forex cash for trading

Some informed banking sources told Financial Vanguard that certain banks may be trading with foreign currency cash available to them instead of releasing the funds to customers, potentially generating significant earnings.

The allegation has raised further concerns among domiciliary account holders, who expect reasonable access to their legitimate foreign currency deposits when they make withdrawals in line with applicable banking requirements.

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