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  • CBN clears next-of-kin to claim funds in dormant accounts

    CBN clears next-of-kin to claim funds in dormant accounts

    Next of kin, legal representative, or beneficial owner have been cleared by the Central Bank of Nigeria (CBN) to make claims on unclaimed balances or funds in dormant accounts.

    The clarification was made by the apex bank in a report it released at the weekend.

    It said that the next-of-kin to dormant account owner can now make claims on unclaimed balances or funds in dormant accounts by submitting applications for the reclaims to the financial institutions.

    Such applications, it said, shall be submitted with necessary legal evidence of title and in the case of corporate entities, their directors, authorised signatories, business addresses and any other customer update for the reclaim of balances transferred to CBN.

    The apex bank said it has authority to issue regulations for the management of dormant accounts and unclaimed funds/balances. It is also authorised to receive and manage eligible funds in trust for the account holders and funds beneficiaries.

    The apex bank is also empowered by law to establish a dedicated office supervised by a management committee.

    The report reads: “The CBN will manage the unclaimed balances by warehousing the funds in the Unclaimed Balances Trust Fund (UBTF) Pool Account and thereafter investing the funds in Nigerian treasury bills and other approved securities.

    “The Unclaimed Balances Trust Fund (UBTF) Pool Account is an account maintained by the CBN for the purpose of warehousing and managing unclaimed balances in eligible accounts.”

    The CBN says it will refund the principal and any interest on the invested funds to the beneficiaries within 10 working days of receiving a reclaim request.

    Read Also: CBN injects $148m into forex market to boost liquidity

    It said that account owners are expected to visit financial institutions to complete an asset reclaim form and provide evidence of account ownership, sworn affidavit of support and valid identification.

    The financial institutions shall verify the claim and initiate the request with supporting documents to CBN within 10 working days.

    The apex bank shall refund the monies to the account of the beneficiaries within 10 working days from the date of the receipt of the financial institution’s request.

    The CBN explained that where the licence of a financial institution is withdrawn, the Nigeria Deposit Insurance Corporation (NDIC) shall assume the role of the financial institutions in the management of dormant account.

    The CBN explained that although the policy does not require banks to transfer funds in domiciliary accounts to the CBN, however, balances in dormant domiciliary accounts, like balances in dormant naira accounts, will be affected by this policy change.

    “However, no active domiciliary account is affected by the policy”, the bank stated.

    The bank described an inactive account is an account that has no customer-initiated transaction for six to 12 months, while a dormant account is an account that has remained inactive for one year or more.

    It said: “Unclaimed balances are account balances and other financial assets that have remained dormant for a minimum of ten years in the books of financial institutions and qualify for transfer to the CBN.

    “Eligible accounts are dormant account balances that have remained with the financial institutions for a period of 10 years or more.

    “These eligible accounts include current, savings, term deposits in local currency, domiciliary accounts, deposits for shares and mutual investments, prepaid card accounts and wallets, government-owned accounts, and others as specified in the guidelines by the CBN.”

    The regulator listed the accounts are exempted from being considered dormant as accounts that are subject to litigation; judgment debt for which the creditor has not claimed the amount of judgment award and the case is still active in court; accounts under investigation by a regulatory authority or law enforcement agency and encumbered accounts including, but not limited to, collaterals and liens.

    The CBN directed commercial banks to notify account owners in writing through the agreed medium such as email text message and letter immediately an account becomes inactive/dormant and thereafter on a quarterly basis.

  • CBN injects $148m into forex market to boost liquidity

    CBN injects $148m into forex market to boost liquidity

    The Central Bank of Nigeria (CBN) has further intervened in the foreign exchange market, injecting a total of $148 million into the system to enhance liquidity.

     The apex bank disclosed this in a statement issued yesterday  by its Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali. According to the statement, the intervention was carried out through the sale of the foreign exchange to 29 authorized dealer banks on July 22 and 23, 2024.

    Read Alslo: CBN injects $148m into forex market to boost liquidity

     The exchange rates for the transactions ranged from N1,470 to N1,510 per dollar, with value dates of T+0 and T+1 for sales at the latter part of each day.

     This latest intervention follows a similar injection of $106.5 million into the market on July 18 and 19, 2024.

     The CBN has consistently emphasized its commitment to stabilizing the foreign exchange market, and these interventions are part of its efforts to address the supply gap. The apex bank has assured Nigerians of its determination to maintain market stability.

  • CBN injects $148m into forex market to boost liquidity

    CBN injects $148m into forex market to boost liquidity

    The Central Bank of Nigeria (CBN) has further intervened in the foreign exchange market, injecting a total of $148 million into the system to enhance liquidity.

    The apex bank disclosed this in a statement on Friday by its Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali.

    According to the statement, the intervention was carried out through the sale of the foreign exchange to 29 authorized dealer banks on July 22 and 23, 2024.

    Read Also: Ooni, Sultan of Sokoto, Etsu Nupe, other traditional rulers frown against protest

    The exchange rates for the transactions ranged from N1,470 to N1,510 per dollar with value dates of T+0 and T+1 for sales at the latter part of each day.

    This latest intervention follows a similar injection of $106.5 million into the market on July 18 and 19, 2024.

    The CBN has emphasised its commitment to stabilising the foreign exchange market, and these interventions are part of its efforts to address the supply gap.

    The apex bank has assured Nigerians of its determination to maintain market stability.

  • CBN hikes interest rate amid inflationary pressures

    CBN hikes interest rate amid inflationary pressures

    The Central Bank of Nigeria (CBN) has once again tightened Monetary Policy Rate (MPR), increasing the interest rate by 50 basis points to 26.75 percent.

    The move is aimed at curbing persistent inflation, particularly in food prices.

    The apex bank also adjusted the asymmetric corridor to +500/-300 basis points while retaining the Cash Reserve Ratio (CRR) at 45 percent and the liquidity ratio at 30 percent.

    Addressing journalists at the end of the July Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, July 23, CBN governor, Olayemi Cardoso noted that the decision to raise the MPR comes amid concerns over the impact of food inflation on the overall price level.

    Despite ongoing efforts to moderate aggregate demand through monetary policy, rising food and energy costs continue to exert upward pressure on prices.

    The MPC attributed this to factors such as insecurity in food-producing areas, high transportation costs, and the activities of middlemen who hoard and export food products.

    To address the food supply challenges, the CBN Governor expressed support for the federal government’s recent measures, including the 150-day duty-free import window for certain food commodities.

    However, the bank emphasized the importance of a defined exit strategy especially from the fiscal authorities to prevent a reversal of gains in domestic food production.

    Cardoso also noted positive developments in the foreign exchange market, with a narrowing spread between different segments and an increase in external reserves.

    Read Also: CBN in rate dilemma over stubborn inflation

    The apex bank urged continued efforts to improve foreign exchange inflows, particularly through diaspora remittances and increased domestic refining capacity.

    The banking system’s resilience was highlighted by the improvement in key financial soundness indicators.

    The CBN emphasized the need for continued monitoring of the system as the recapitalization exercise progresses.

  • JUST IN: CBN raises MPR by 50 basis points

    JUST IN: CBN raises MPR by 50 basis points

    The Monetary Policy Committee (MPC), on Tuesday announced another increase in the country’s Monetary Policy Rate (MPR), known as the baseline interest rate, to 26.75 per cent from 26.25 per cent.

    The MPC also adjusted the Asymmetric Corridor to +500/-100 basis points from +100/-300 basis points around the MPR.

    Read Also: CBN in rate dilemma over stubborn inflation

    Mr Yemi Cardoso, the Governor of CBN made this known on Tuesday in Abuja, while presenting the communiqué from the 296th meeting of the MPC.

    Details shortly…

  • CBN in rate dilemma over stubborn inflation

    CBN in rate dilemma over stubborn inflation

    • Apex bank likely to hike interest again

    The choice to hold interest rate unchanged or further increase in benchmark lending rate will dominate Central Bank of Nigeria (CBN)’s policy consideration, with expectations that the apex bank may likely increase the benchmark interest rate.

    The Monetary Policy Committee (MPC) of the CBN, headed by the Governor of the CBN, begins a crucial two-day meeting today. The meeting comes on the back of last week’s release of the latest inflation report, showing that inflation rose again to another high, although the increases in average living costs were at slower pace.

    The MPC is the highest policy-making organ of the apex bank. The MPC provides monetary policies and benchmarks, which determine the direction of the financial services sector, and the economy to a large extent.

    Most analysts yesterday said they expected the apex bank to increase the Monetary Policy Rate (MPR) in line with the avowed determination of the CBN to rein in inflation. Many analysts however said the slowdown in the inflation pace and the expected decline in the second half should moderate the hawkish stance of the apex bank and keep the rate unchanged.

    The National Bureau of Statistics (NBS) had reported that inflation rate rose by 0.24 percentage points from 33.95 per cent in May 2024 to 34.19 per cent in June 2024.

    The 24 basis points increase in June 2024 represented a considerable slowdown from increases of 77 basis points and 49 basis points recorded in May 2024 and April 2024 respectively. The earlier slowest increase was in June 2023, when inflation rose by 38 basis points.

    The Consumer Price Index (CPI) had risen from 33.20 per cent in March 2024 to 33.69 per cent in April 2024. Nigeria has seen 19 months of consecutive inflationary pressure, pushing inflation rate to a 28-year high.

    Most experts said they expected a gradual and sustained decline in inflation in the months ahead, with several experts highlighting possible disinflation from July 2024.

    Analysts at Afrinvest West Africa, Cordros Capital Group and Arthur Steven Asset Management among others said the apex bank would likely increase the benchmark interest rate, although at a slower rate. There are expectations of rate hike of between 50 and 100 basis points, likely to raise the nominal interest rate to as high as 27.25 per cent.

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    But analysts at Financial Derivatives Company (FDC) and SCM Capital among others said the apex bank could reconsider its hawkish stance and hold the MPR, given the expected disinflation in the period ahead.

    Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe said the apex bank might increase the interest rate again, although there would be consideration for the slowing inflation rate.

    “They will give consideration to the slowing rate of inflation but the fact that we are still seeing an increase rather than a decrease might impact their decision. The continuing depreciation of the naira at the foreign exchange (forex) market could also tip their hands in favour of a rate hike,” Amolegbe said.

    Afrinvest said it expected the 150-day relaxation of taxes on select food imports, coupled with ongoing green harvest in the South to support softer food inflation, pushing down inflation rate for the first time in July 2024.

    Analysts however noted that the recent PMS pump price hike due to product scarcity in some states, as well as disruptive impact of flooding on farm and logistical activities could impact inflation expectation.

    Afrinvest stated that the MPC “would likely sustain hawkish tone with further 50 basis points to 100 basis points hike in the MPR even though we believe a policy hold is more appropriate at this point on the balance of factors consideration”.

    FDC, which predicted a “gloomy” inflation outlook in July, said the apex bank might consider a pause.

    “The inflation outlook for July looks gloomy. Despite some signs of cooling in June and the impact of the base effect in July, several factors suggest that inflation may remain high. In spite of the July inflation outlook, we are still of the view that the CBN will maintain the status quo at its next meeting on July 22nd and 23rd,” FDC stated.

    SCM Capital noted that inflation rate would remain elevated but at a slower rate, adding that the apex bank “may consider its decision on further rate hike in the next MPC meeting”.

    Analysts at Cordros Capital said they expected the MPC to assess recent developments in the global and domestic economies since the last policy meeting and take a decision along the line of its previous hawkish stance.

    “For the global economy, we note that interest rates have remained elevated. However, central banks are beginning to pivot to monetary policy easing as global inflation approaches set targets. On the domestic front, we highlight the resilient economic growth but still elevated inflationary pressures indicated in the further uptick in the June inflation print to 34.19 per cent.

    “Additionally, we point out the increased volatility in the naira primarily due to muted foreign portfolio investment (FPI) inflows and frail forex interventions from the CBN. Therefore, we expect the MPC to maintain a tight monetary policy stance at its upcoming meeting to reduce the negative real rate of return, manage inflation expectations, and stabilize the naira,” Cordros Capital stated.

    Cordros Capital expected the CBN to raise the MPR by 100 basis points to 27.25 per cent.

    Analysts however noted that given the slower pace of the increase in the inflation rate and an anticipated disinflation trend for the remainder of the year, there could be a moderate increase than in previous meetings.

  • CBN tightens rules on dormant accounts

    CBN tightens rules on dormant accounts

    • Cardoso assures Nigerians of economic growth, stability

    The Central Bank of Nigeria (CBN) has issued revised guidelines on the management of dormant accounts, unclaimed balances, and other financial assets in Nigerian banks and financial institutions.

    The new rules aim to identify dormant accounts and reunite them with their owners, establish standardized procedures for account management, and create a framework for reclaiming warehoused funds.

     Accounts deemed dormant after 10 years will be eligible for inclusion under the guidelines. These include various deposit types, prepaid cards, government-owned accounts, unclaimed salaries, proceeds from stale drafts, judgment debts, and other financial assets as designated by the CBN.

    However, accounts subject to litigation, under investigation, or encumbered by collateral are exempted.

    The CBN will establish an “Unclaimed Balances Trust Fund (UBTF) Pool Account” to hold dormant funds. A management committee will oversee the account’s operations, issue regulations, monitor compliance, and manage the fund in line with the Banks and Other Financial Institutions Act (BOFIA) 2020.

    The CBN will also publish annual lists of unclaimed balances transferred to the UBTF Pool Account and outline procedures for reclaiming funds.

    Read Also: CBN intervenes in foreign exchange market

    The Nigeria Deposit Insurance Corporation (NDIC) will assume the role of the financial institution for accounts in liquidation.

    Financial institutions are mandated to monitor inactive accounts, notify customers, and establish procedures for continuous contact. They must also bear the costs of maintaining inactive and dormant accounts and render quarterly reports to the CBN.

    To facilitate the reclaim process, account owners must inform financial institutions of changes in contact details and submit applications for reclaiming funds. Financial institutions must formulate policies for recognizing and managing dormant accounts, establish effective controls, and transfer eligible balances to the UBTF Pool Account.

    The CBN’s move is expected to enhance transparency and accountability in the management of dormant accounts, protect the interests of account holders, and ensure the efficient utilization of financial resources.

     Meanwhile, the CBN yesterday in Abuja, rolled out data to show improved growth and stability in the nation’s economy.

    This is as the apex bank through its Governor, Olayemi Cardoso, assured Nigerians of better days ahead.

    Rolling out the growth and economic stability indices during an interactive session with the Senate Committee on Banking, Insurance and other Financial Institutions, Cardoso said: “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June 2024, indicating successful price discovery, increased market efficiency, and reduced arbitrage opportunities.

     “The stock of external reserves increased to US$36.89 billion as of July 16, 2024, compared with US$33.22 billion at end of December 2023, driven largely by receipts from crude oil related taxes and third-party receipts.

     “In Q1 2024, we maintained a current account surplus and saw improvements in our trade balance.

     “Our external reserves level as at end of June 2024 can finance over 11 months of import of goods and services, or 14 months of goods only.

     “This is significantly higher than the prescribed international benchmark of 3.0 months, indicating a strong buffer against external shocks.

     “The banking sector remains robust and diverse, comprising 26 commercial banks, six merchant banks, and four non-interest banks.

     “Key indicators such as capital adequacy, liquidity, and non-performing loan ratios all showed impressive improvements, underscoring the sector’s growing stability and resilience.

    “The equity market has shown impressive performance, with the All-Share Index rising by 33.81 per cent and market capitalization expanding by 38.33 per cent from December 2023 to June 2024, reflecting growing investors’ confidence.

     “While we are encouraged by these positive trends, the CBN remains vigilant and committed to implementing policies that support sustainable growth in our financial markets, while maintaining overall economic stability”

    He assured the committee members that required measures and strategies have been mapped out to confront emerging challenges.

    “To combat inflation, we have implemented a comprehensive set of monetary policy measures. These include raising the policy rate by 750 basis points to 26.25 per cent, increasing Cash Reserve Ratios, normalizing Open Market Operations as our primary liquidity management tool, and adopting Inflation Targeting as our new monetary policy framework.

     “In the area of banking supervision, the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry.

     Key measures include intervention in three banks, revocation of Heritage Bank’s licence, increasing minimum capital requirements, and enhancing AML/CFT supervision.

     “We also introduced new frameworks for Cash Reserve Requirements and cybersecurity and prohibited the use of foreign currency collaterals for local currency loans.

     “We are in the process of reviewing the Bank’s micro and macro-prudential guidelines to reinforce the resilience of financial institutions in Nigeria to withstand tightened conditions, thus creating a secure and attractive investment climate.

     “We have signaled our plans to re-capitalize deposit money banks in Nigeria to improve capital inadequacy and their capacity to grow the economy.

     “Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy, while adhering to international best practices,” he said.

  • CBN intervenes in foreign exchange market

    CBN intervenes in foreign exchange market

    The Central Bank of Nigeria (CBN) has started selling foreign exchange on a regular basis through Authorised Dealer Banks and licensed Bureaux De Change (BDCs) as a response to the current fluctuations in the foreign exchange market. 

    These fluctuations are primarily caused by the demand pressure coming from corporate entities and the seasonal increase typical during the summer period. 

    By implementing regular sales of foreign exchange, the CBN aims to stabilise the market and ensure smoother transactions for both businesses and individuals involved in foreign exchange activities. 

    Director, Financial Markets Department of the CBN Dr Omolara Omotunde Duke in a statement on Friday night assured the public of the bank’s commitment to address the demand pressure and stabilize the foreign exchange market. 

    Highlighting recent transactions, the CBN disclosed that it sold a total sum of US$106,500,000.00 to 29 authorized dealer banks on Thursday, July 18 and Friday, July 19, 2024. 

    These transactions took place within an exchange rate range of N1,498.00/US$1 to N1,530.00/US$1. Additionally, the CBN purchased US$9,500,000 (Nine Million and Five Hundred Thousand Dollars) from four authorized dealer banks at rates between N1,510.00/US$1 and N1,550.00/US$1. All these transactions are marked for settlement on July 19, 2024.

    The Central Bank also stated its commitment to closely monitor compliance with existing trading rules and regulations by authorized dealer banks. This is seen as an effort to promote ethical conduct and ensure stability in the foreign exchange market.

    Read Also: CBN resumes forex sales to BDCs

    The general public was also advised to direct their foreign exchange demands to their respective banks and BDC operators, adhering to prevailing market regulations.

    With the regular sale of foreign exchange and ongoing monitoring of trading practices, the CBN aims to meet demand pressure, foster stability, and sustain a well-functioning foreign exchange market.

  • CBN resumes forex sales to BDCs

    CBN resumes forex sales to BDCs

    • •ABCON hails sale 0f $20,000 per licensee

    The Central Bank of Nigeria (CBN)  yesterday resumed dollar sales to  Bureaux De Change (BDC) operators with a planned disbursement of $20,000 to each licensee.

    The forex injection, it said, is expected to curb forex distortions, boost liquidity in the market and stabilise the naira.

    In a circular   to all BDC  operators and the   public, the CBN said it  “observed the continued distortions in the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.”

    The circular was signed by Aliyu Mahdi for the bank’s Acting  Director of  Trade and Exchange Department. 

    The apex bank said  that eligible BDCs would be allowed to purchase a maximum of $20,000 at a fixed rate of N1,450 to the dollar. The rate is pegged to the lower band of the previous day’s trading rate on the Nigerian Autonomous Foreign Exchange (NAFEX) window.

    BDCs are permitted to sell dollars to eligible end-users at a maximum margin of 1.5 percent above the purchase rate from the CBN.

    To ensure compliance, BDCs are required to make Naira payments into designated CBN accounts and submit necessary documentation for disbursement at specified branches in Abuja, Lagos, Kano, and Awka in Anambra State.

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    The CBN attributed the decision to the widening gap between the official and parallel market exchange rates, which it blamed on distortions in the retail end of the market. The bank expressed hope that the move would also help to reduce pressure on the naira.

    Association of Bureaux De Change Operators of Nigeria (ABCON) President   Aminu Gwadabe said the new dollar injections in the market will induce liquidity and stabilise the naira.

    He added that the move has already impacted positively on the Naira, which appreciated from N1,640/$ to N1,570 /$ at the parallel market.

    According to him, the review of the return of forex sales to BDCs is commendable and a good step in addressing the challenges confronting the retail end forex market.

    The surge in demand pressure through the recent fiscal policies such as duty waiver, and removal of import duty on certain basic needs will surely be augmented by the resumption of forex sales to the BDCs.

    “The BDCs will continue to play their third-level roles in the retail end of the market and will remain the potent and most effective tool of the CBN’s demand monitoring mechanism and meeting the critical liquidity needs in the forex market,” Gwadabe said.

    He called on ABCON members to reciprocate the opportunity and comply with regulations for the sustainability of the sub-sector.

    The ABCON president also enjoined the government to continue to collaborate with stakeholders in the strategy and tactics to tackle the challenges facing the country.

  • CBN skips BDCs in $122.67m injection to forex market

    CBN skips BDCs in $122.67m injection to forex market

    The Central Bank of Nigeria (CBN) has injected $122.671 million into the foreign exchange (forex) market to boost dollar liquidity.

    Unlike previous interventions where the apex bank funded Bureaux De Change (BDCs),  the current dollar intervention went to 46 authorised dealers, made up of banks and other financial institutions.

    The CBN recently not only withdrew the licences of 4,173 BDCs but unveiled new regulatory guidelines pegging minimum capital base for BDCs at N2 billion for Tier-1 and N500 million for Tier-2 operators.

    However, the new move to deepen liquidity in the market through dollar injections aligns with the apex bank’s determination to promote stability and reduce market volatility in the foreign exchange market.

    A statement signed by the Bank’s Director in charge of Financial Markets, Dr. Omolara Duke, disclosed that of the total sale, US$67,500,000.00 was sold to 27 authorised dealers, while the sum of US$2.5 million was bought from one authorised dealer on July 10, 2024. The range of the bid for the July 10, 2024 sales was N1,480.0/US$-N1,500.0/US$, while the value date for the payments, going by the settlement cycle of two days (T+2), is July 12, 2024.

    Read Also: CBN injects $122.67 million into FX market to boost liquidity

    Similarly, on July 11, 2024, the sum of US$55,171, 000 was sold to 19  authorised dealers at N1,540.0/US$, and no FX was purchased. The value date for the payments of the spot sale is July 15, 2024.

    The statement, therefore, urged all authorised dealers to ensure that foreign exchange purchases from the CBN are used exclusively for trade-backed transactions, which should be reported within 72 hours.

    While reiterating that the CBN supplies foreign exchange to the Foreign Exchange (FX) market to improve liquidity through FX spot sales to Authorised Dealers using two-way quotes, it assured that the bank will continue to ensure stability in the FX market.

    Meanwhile, the value of the naira to the dollar weakened by 359 basis points to close weekend at N1,563.80 per dollar at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).