Banking Regulation Newsletter – January 2021
The Central Bank of Nigeria (“CBN” or “the Bank”) issued some circulars and framework documents between November 2020 and January 2021, thus further demonstrating the banking regulator’s policy direction.
The Bank issued five circulars on diaspora remittances within the short period of 3 months, obviously showing concerted effort to address the unstable foreign exchange market and a need to maximize available foreign exchange liquidity sources. The Bank’s other focus areas include Nigerian payment systems, non-interest asset-backed securities, CBN special bill, and the Nigerian cheque standards.
The CBN seeks to liberalize, simplify and improve the receipt and administration of diaspora remittances in Nigeria. According to the CBN, the new policy is to ensure transparency, grow diaspora remittances, and significantly improve foreign exchange inflows into Nigeria. This measure will stabilise the exchange rate of Dollar to Naira as there would invariably be an increase in the supply of dollars within the country.
Also, Beneficiaries of Diaspora Remittances through International Money Transfer Operators (IMTOs) shall henceforth receive such inflows in foreign currency (US Dollars) through the designated bank of their choice. Such beneficiaries may have the option of receiving these funds in foreign currency cash (US Dollars) or in their domiciliary account.
The Nigerian Inter-Bank Settlement System (NIBSS) shall manage Diaspora remittances through a central reporting portal. This way, the CBN intends to block all unofficial channels through which such remittances were hitherto made, which facilitated the diversion of remittance flows meant for Nigeria.
The Circular Number TED/FEM/FPC/GEN/01/ prescribed that:
i. Beneficiaries of diaspora remittances through International Money Transfer Operators (“IMTOs”) shall receive such inflows in foreign currency (US Dollars) through designated banks of their choice.
ii. The beneficiaries/recipients will have the option of receiving the funds in foreign currency cash (US Dollars) or by direct transfer/credit in their ordinary domiciliary accounts.
iii. The beneficiaries will also have unfettered access and utilisation to such foreign currency proceeds, either in cash and/or in their domiciliary account.