Banks battle pressure on new naira notes, CBN slashes allocation

Ten days to the January 31 deadline set by the Central Bank of Nigeria for the old N1,000, N500 and N200 notes to cease being legal tender, Saturday PUNCH has discovered that the apex bank has reduced the amount it makes available to Deposit Money Banks from N4bn weekly to N700m.

 

It was gathered that before the introduction of the redesigned notes, each bank was allowed to load N4bn in its Automated Teller Machines across the country, but with the introduction of the new notes, the apex bank was now giving each of the banks N700m of the redesigned notes to distribute to branches nationwide.

 

This explains why the new notes have not circulated well as customers are still getting a mixture of old and new naira notes from their banks. However, a top official of the CBN told Saturday PUNCH that the reduction was deliberate and meant to force bank customers to embrace alternative payment channels in place of cash.

 

A top banker told one of our correspondents on condition of anonymity on Friday, “Before the introduction of the new notes, each bank had available N4bn to disburse to customers through ATMs and across the counters on a weekly basis.

 

“However, the cash is drying up as each bank is now being given N700m weekly with the CBN directing that the money should only be loaded in ATMs and not dispensed over the counter. The truth is there is not enough cash in the banks as we are mopping up the old notes in order to beat the CBN deadline.”

 

When contacted, the Director, Corporate Communications, CBN, Osita Nwanisobi, simply told Saturday PUNCH, “The old notes are still legal tender till January 31. Thank you.”

 

When pressed further, he said, “I am with some people now; I can’t talk to you further.”

 

However, a top official of the apex bank explained that the reduction of the weekly cash allocation to the bank was deliberate and was intended to force bank customers to embrace alternative payment channels so as to reduce the volume of money in circulation.

 

As a result of the reduction in the volume of cash available to them, it was learnt that the banks had been adopting fresh strategies to beat the deadline and not run afoul of the apex bank’s directive.

 

Saturday PUNCH gathered that the banks, which had been hoping that the deadline would be extended following pressure from their managing directors and other stakeholders, might have resigned to the new reality following the insistence of the CBN that the deadline remained sacrosanct.

 

It was learnt on Friday that some of the banks had sent signals to their branches to evacuate all old notes from their ATMs by Monday in order to beat the deadline given by the CBN.

 

This is a new development as bankers had hoped before now that the apex bank would extend the deadline since they could not meet up with the demands of their customers for the new notes.

 

The CBN governor, Godwin Emefiele, who was represented by the Director, Legal Services Department, Mr Kofo Salam-Alada, said during a sensitisation visit to the Computer Village in Ikeja, Lagos, on Wednesday that the commercial banks should approach the apex bank branches across the country to pick up the new naira notes.

 

He said the new naira notes were in the apex bank’s vaults awaiting pick up by commercial banks, adding, “We have been calling upon the banks to approach the Central Bank of Nigeria across the country to come and pick up the new notes; we have even waived some of the conditionality for accessing currency notes in order to accommodate the banks.

 

“The banks were being given slots before, but now the Central Bank of Nigeria is bending over backward to accommodate the demands of the banks in order to service them so that they can service you and so that everybody will have access to the new naira notes,”

 

A branch manager of a Tier-1 bank on Lagos Island told Saturday PUNCH on Friday, “Officials of the CBN have been visiting bank branches to monitor compliance with the directive that banks should load their ATMs with only new notes and asking some questions surrounding the redesigned notes.

 

“It is true that the apex bank has asked commercial banks to come to its offices in all states of the federation to pick up new notes for their customers, but CBN is pushing all the commercial banks to load their machines with the new notes. We have been mandated by our bank to evacuate all the old notes from our ATMs by Monday in order to beat the deadline given by the CBN.

 

“However, the situation on the ground is a little contradictory because our weekly allocation in some parts of our locations has not been met.”

 

The source added that due to inadequate supply of the new notes, what the branches had decided was to load the ATMs with whatever volume of the new notes that was made available to them, while the other machines would not be loaded at all or would not be loaded up to full capacity in order to avoid sanctions from the apex bank.

 

“We still don’t have enough of the new notes as communicated by the CBN. We have been keeping the few ones received from customers to load the machines. What I foresee is that some ATMs will not be loaded or not loaded to full capacity,” the branch manager added.

 

The manager added that his bank had developed a checklist for branch managers and those in operation to ensure compliance with the CBN directive.

 

The checklist listed the documents that the branches must file to include: “Balance of new currency notes in the branch at the close of business each day from January 10, 2023 to January 19, 2023, detailing the denominations and amounts.

 

“Schedule of new currency notes received daily in each branch from the CBN in the period January 11 to 19, 2023, detailing the various denominations and amounts.

 

“List of all ATMs maintained in the branch premises and their logs of loading and dispensing.

 

“Record of daily amounts loaded on each ATM from core banking application.

 

“Schedule of daily amounts dispensed by ATMs in each branch from January 11 to 19, 2023 analysed into various denominations, indicating the new notes component of the dispensed cash (denomination and attributable amounts).

 

“List of customers/accounts that withdrew from ATMs in the period January 11 to 19, 2023 detailed into old and new note recipients.”

 

On the implication of customers not getting the new notes a few days to the CBN deadline, a Lagos-based banker told Saturday PUNCH, “I foresee a situation whereby banking halls will from Monday be flooded by customers, who are desperate to get the new notes and some of them may become unruly if they can’t get what they want.

 

“It is also almost certain that there will be clashes when traders begin to reject the old notes before the deadline. Honestly, I foresee a crisis starting next week.

 

“The sensitisation being done by the CBN now is rather late. The bank started the campaign a few weeks before the deadline.”

 

An official in the corporate affairs department of a Tier-2 bank, who pleaded not to be named, said the lender had complied with the CBN directive by loading its ATMs with the new notes across locations, but added that more of N1,000 notes were being loaded as the lower denominations were not available.

 

The Deputy Director, Currency Operation, CBN, Dr Rekiyat Yusuf, admitted in Lokoja, Kogi State, on Friday that customers might besiege banks to dispose of old naira notes as the deadline draws near, adding that appropriate sanctions would be applied against banks found dispensing old notes to customers.

 

But reacting, some customers who spoke with Saturday PUNCH said the returning old notes would lead to overcrowding in banking halls.

 

One of the customers, Godwin, said he stopped keeping large amounts of old notes since the beginning of the month and was now dependent more on electronic banking.

‘Banks hoarding naira’

 

Meanwhile, the CBN has berated commercial banks in Port Harcourt, Rivers State over their refusal to dispense the sum of N4.5bn new notes distributed to them in the metropolis.

 

The CBN Branch Controller in Rivers State, Maxwell Okafor, spoke when an enforcement monitoring team visited some banks and markets in Port Harcourt on Friday.

 

Okafor stated that the apex bank had disbursed about N4.5bn new notes to the commercial banks in the state and wondered why many customers had yet to get the new notes from ATMs.

 

He said the attitude of the commercial banks in Port Harcourt and its environs was deliberately frustrating the efforts of the CBN in implementing the disbursement of the new notes by hoarding it in their vaults.

 

He urged the banks to stop dispensing old notes, adding that another N2bn in new notes would be disbursed to the banks within the next 24 hours.

 

Okafor stated, “We have been monitoring the dispensing of the new naira notes and the impression we have is not encouraging. We have visited some banks and one of the banks we visited was not dispensing the new naira notes.

 

“Their ATM machines are not functioning even as early as the time we came. We had it on good authority that the banks received money from the CBN. Some of these banks received money yesterday (Thursday) and the money is still in their vaults.

 

“In some of the banks, their ATMs are down. So, there is no explanation for their actions and the CBN has warned that there will be serious consequences for hoarding new naira notes and giving them to special customers.”

 

He added, “Many of the banks we visited are not dispensing the new naira notes. On Thursday, we injected about N2.5bn into the banks in Port Harcourt and in less than 24 hours, we injected another N2bn.

 

“And many of the ATMs are not dispensing; so, it’s a situation we want to look at very critically and there will be consequences.  We stopped dispensing old currencies since the new currencies came out. There is no reason why the ATMs should not dispense money and the money they collected are in the vaults.

 

“There is pressure from these banks to collect more money, so what did they do with the ones they collected? What did they do with the N2.5bn and N2bn they collected? We are going to escalate this matter and we will consult with the management on the next line of action.”

 

Also speaking, the Deputy Director of Strategy, CBN, Emenike Eleonu, said there was no doubt that some banks were trying to frustrate the work of the apex bank as they were not dispensing the new notes to customers.

Old notes face rejection

 

However, some traders in Adamawa State are planning to start rejecting the old notes from Wednesday, January 25, 2023.

 

This came to the fore during an engagement with traders at the Jimeta Ultramodern Market by the CBN team led by the Director, Internal Audit Department, Mrs Alfa Lydia Ifeanyichukwu, and the Yola branch Controller, Mr Sanusi Sah Nyashi.

 

However, traders who spoke at the forum lamented the difficulties they encountered in getting the new notes as they complained that banks were not readily dispensing the redesigned notes to them.

 

The traders stated that commercial activities in the state might grind to a halt as they planned not to accept the old notes from January 25.

 

It was also learnt that business owners in the state were mooting the idea of closing their premises from Wednesday till February 1 to avoid being caught by the enforcement of the policy on the new naira notes.

 

The Sarkin Kasuwa, Jimeta Ultramodern Market, Musa Yaro, said some traders in the market had decided not to accept the old naira notes from Wednesday.

 

He explained that the action was propelled by the lack of confidence in the new policy based on past experiences by stakeholders

 

He noted the seemingly slow response of the banks with concerns about last minute rush by citizens to deposit old notes overwhelming the banks were other reasons they decided to stop collecting the old notes.

 

But Nyashi allayed the traders’ concerns, adding that the CBN had flooded the banks with the new naira notes, adding that the issuance of enough notes was to forestall a situation where citizens would be unable to access the new notes.

NOA’s sensitisation

 

Meanwhile, the National Orientation Agency in Zamfara State has taken its sensitisation on the new notes to mosques, churches and motor parks with a view to encouraging the general public to deposit their old naira notes before the deadline.

 

The state Director, NOA, Aminu Ibrahim, who went round some motor parks, churches and mosques in the state on Friday, said there would be no extension of the January 31 deadline.

 

He advised members of the public to deposit old naira notes in banks to collect new ones, stressing, “The old naira notes will not be legal tender after January 31, 2023.”

 

He added that it was an offence for anyone to reject the old notes before the deadline.

 

Ibrahim stated, “I want to draw the attention of the general public that it is an offence for anyone to say that he will not receive the new naira notes for now.

 

“I am also calling on financial institutions such as banks and PoS operators to stop issuing old naira notes to their customers.”

CBN on counterfeiting

 

The apex bank said on Friday that new naira notes had security features, which made them difficult to counterfeit.

 

The CBN Deputy Director, Oluwole Owoeye, who said that counterfeiting and hoarding were principal reasons the apex bank redesigned the naira notes, allayed the fears of traders, who were rejecting the new notes on the grounds of counterfeiting, assuring them that it was difficult to counterfeit the new notes.

 

Owoeye, who spoke at the Oja Oba Market in Ado Ekiti, the Ekiti State capital, during a programme to sensitise stakeholders on the currency redesign, urged the traders to feel free to accept and spend the new naira notes without fear.

 

He said, “Counterfeiting is done all over the world, but it behoves on the regulatory authority to make it more difficult and that is part of the reasons for the redesign. We faced some challenges with the old naira notes; people were hoarding them, then the notes were easy for them to counterfeit.

 

“So, we have to redesign to make sure we add some features to the currency so that it becomes more difficult to counterfeit. That is the whole essence of redesigning the naira notes.”

 

The Ado Ekiti Branch Controller, CBN, Abiola Omotoso, who said the new naira notes were legal tender with the same quality as the old ones, encouraged the traders to accept them in exchange for goods and services.

 

“People should not reject the new naira notes. They are legal tender. They are issued by the Federal Government and they are backed by law. They should not be rejected. They are genuine,” he stated.

 

The branch controller, who said that ATMs of the banks in Ekiti were dispensing the new naira notes in line with CBN directive, said it was an offence to sell currency notes.

 

He said, “There is an Act of the National Assembly that is against currency trading and the CBN normally carries out operations in collaboration with security agencies to arrest those people that are selling the new notes illegally.

 

“What informed the redesigning of the naira note is, from the address given by our governor, over 87 per cent of the money in circulation is outside the banking system.

 

“The implication is that the monetary policy designed and implemented by CBN will not be effective, but if all the money that is in circulation is in the banking system, there will be effective monetary policy.”

(PUNCH)