Economy
CBN threatens to suspend top Nigerian Banks and BDCs Licenses If…
…found diverting funds
The Central Bank of Nigeria (CBN) has announced that it will suspend the dealership licenses of any Bureau de Change (BDC) operators or Authorised Dealer banks found diverting funds or violating its newly implemented foreign exchange trade guidelines.
In a statement issued on Tuesday, the CBN, through its Acting Director of Trade and Exchange Department, Dr. W.J Kanya, emphasized that these guidelines were introduced following the temporary approval granted to existing BDCs to purchase foreign exchange from Authorised Dealers, with a weekly limit of $25,000.
Additionally, the apex bank has set a maximum disbursement limit of $5,000 per transaction on a quarterly basis for BDCs.
Key Guidelines for Foreign Exchange Transactions
The CBN outlined the following conditions for foreign exchange transactions involving BDCs and Authorised Dealer Banks:
Authorised Dealers are permitted to sell a maximum of $25,000 per week to each BDC.
A BDC must purchase foreign exchange from only one preferred Authorised Dealer Bank per week, and any violation of this rule will result in sanctions.
The selling rate for foreign exchange from Authorised Dealers to BDCs must align with the prevailing daily rate at the Nigerian Foreign Exchange Market (NFEM) window.
BDCs must sell foreign exchange to end-users at a maximum margin of 1% above the buying rate.
The 1% margin limit applies to all funds retailed by BDCs, regardless of their source.
Authorised Dealer Banks are required to submit weekly reports on sales to BDCs using the specified reporting format, sending them to the CBN’s Trade & Exchange Department via teddmo@cbn.gov.ng.
BDCs must also submit daily transaction reports detailing foreign exchange purchases from Authorised Dealer Banks and other sources, as well as utilization records, on the Financial Institutions Forex Reporting System (FIFX).
Permitted Uses and Compliance Measures
Funds obtained by BDCs can only be disbursed for the following transactions, with a quarterly transaction limit of $5,000:
Business Travel Allowance (BTA) / Personal Travel Allowance (PTA)
Overseas school fees
Overseas medical fees
BDC operators must maintain detailed records of all transactions, including:
The Bank Verification Number (BVN) of each end-user.
Endorsement of the disbursed amount in the beneficiary’s international passport.
The CBN also reiterated the importance of strict adherence to Anti-Money Laundering (AML) laws and Know Your Customer (KYC) protocols in handling foreign exchange transactions.
Penalties for Non-Compliance
The CBN warned that any Authorised Dealer Bank or BDC operator found violating these guidelines, including fund diversion, will face severe sanctions, which may include suspension of their dealership licenses.
The naira depreciated to N1, 615 per dollar in the parallel market from N1,610 per dollar on Monday.
Likewise, the Naira depreciated to N1,602 per dollar in the Nigerian Foreign Exchange Market (NFEM).
Data published by the Central Bank of Nigeria, CBN, showed that the indicative exchange rate for the naira rose to N1,602 per dollar from N1,596 per dollar on Monday, indicating N6 depreciation for the naira.
Consequently, the margin between the parallel market and NFEM rate narrowed to N13 per dollar from N14 per dollar on Monday.
The Nigerian stock market opened the week on a bullish note on Monday, gaining N228 billion on the Nigerian Exchange Ltd.
Market capitalisation rose by N228 billion or 0.34 per cent and closed at N66.693 trillion compared to Friday’s figure of N66.465 trillion.
Similarly, the All-Share Index (ASI) climbed by 363.57 points or 0.34 per cent, reaching 106,116.18 from 105,752.61 recorded earlier.
The Nigerian stock market opened the week on a bullish note on Monday, gaining N228 billion on the Nigerian Exchange Ltd.
Market capitalisation rose by N228 billion or 0.34 per cent and closed at N66.693 trillion compared to Friday’s figure of N66.465 trillion.
Similarly, the All-Share Index (ASI) climbed by 363.57 points or 0.34 per cent, reaching 106,116.18 from 105,752.61 recorded earlier.
The positive trend was driven by strong buying interest in medium and large-cap stocks including International Breweries, Legend Internet Plc, Cadbury Nigeria, Fidson and more.
In spite of the upward trend, the market breadth closed positively, with 47 gainers and 16 losers.
International Breweries led the gainers’ chart, rising by 10 per cent to close at N8.47 per share.
Legend Internet Plc followed, appreciating by 9.97 per cent to settle at N7.50 per share.
Cadbury Nigeria gained by 9.96 per cent, and end the day at N29.25, while Fidson rose by 9.95 per cent to close at N20.45 per share.
Eterna also advanced by 9.90 per cent to close at N43.85 per share.
On the losers’ chart, Livestock Feeds dropped by 10 per cent, closing at N8.55 per share.
Aradel Holdings declined by 9.86 per cent to end the session at N448.00 per share
Tripple Gee fell by 9.60 per cent to close at N1.79, while John Holt Plc shed 7.94 per cent to close at N5.80 per share.
Linkage Assurance lost by 6.15 per cent, and finished the day at N1.22 per share.
A total of 500.59 million shares worth N12.110 billion were traded in 17,637 transactions.
This is compared to Friday’s 428.08 million shares worth N20.174 billion, exchanged across 14,284 transactions.
Access Corporation led the activity chart with 60.867 million shares traded, which was worth N1.45 billion.
Fidelity Bank followed with 56.105 million shares valued at N1.13 billion while the United Bank for Africa sold 34.53 million shares worth N1.174 billion.
Guarantee Trust Holding Company transacted 33.49 million shares valued at N2.181 billion and the Nigerian Breweries traded 28.336 million shares, amounting to N1.15 billion.
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