CBN warns banks against rejecting older, smaller dollar bills

The Central Bank of Nigeria (CBN) has warned commercial banks and forex dealers against rejecting old and lower denomination of U.S. dollars from customers.

Banks in Nigeria and money exchangers typically prefer higher denominations of foreign bills like the 100-dollar bill and pay less for lower notes.

In a circular dated June 27, signed by Solaja Mohammed-J Olayemi, the acting director of the Currency Operations Department, and released on Monday on the bank’s website, the CBN reiterated a previous directive issued on April 9, 2021, which prohibits banks and foreign exchange dealers from rejecting old or lower denomination U.S. dollar bills.

The circular contained a reminder to banks and foreign exchange dealers that they are required to accept all denominations of US dollar bills, including older or lower value bills.

Non-compliance to be met with sanctions

The directive aims to eliminate customer frustration caused by rejections and ensure consistent treatment of deposits as non-compliance will be met with sanctions by the CBN.

The CBN also discouraged the marking or stamping of US dollars by forex dealers.

These markings can damage the bills, causing them to fail authentication during processing and creating additional problems down the line.

Nigeria has faced a persistent shortage of foreign exchange for years, leading to the weakening of the naira and fuelling inflation. In response, the Central Bank of Nigeria (CBN) has implemented several new policies aimed at attracting foreign investors, boosting forex supply, and stabilizing the market.

The measures have included withdrawing permits for existing money exchangers and issuing new ones to ensure a more regulated and efficient foreign exchange system.