CBN probes banks’ restriction of customers’ access to forex accounts

Amid rising concerns over restrictions imposed by some banks on customers’

Financial Vanguard learnt that the apex bank would intervene on the side of customers by compelling banks to honour all legitimate withdrawal requests from domiciliary accounts and dispense foreign currencies as requested by account holders.

Several bank customers have told Financial Vanguard that various banks have adopted different tactics to impose total or partial restrictions on cash withdrawals from their foreign currency accounts.

A visit to some banks in Lagos by Financial Vanguard confirmed that the practice exists to varying degrees.

The situation is not different in banks located in other parts of the country, as customers complain of such restriction. While some banks place limits on the amount customers can withdraw per transaction, others declare that foreign currencies, particularly US dollars and British pounds, are unavailable. Banks offer lower denominations.

A few other banks offer to dispense only lower denominations, such as $20 notes, a practice some customers said was aimed at discouraging account holders from proceeding with their withdrawal requests.

According to one of the customers who spoke to Financial Vanguard on condition of anonymity, the tactic has put banks in a position where they can demonstrate compliance with CBN regulations while, in practice, making it difficult for customers to access their domiciliary funds. Speaking to our reporter, a customer of one of the old-generation banks, Adebayo Ayomide, said: dispense $3,000. The teller added that he was not sure the customer would be able to withdraw as much as $3,000, even if he returned the following day.

At another bank, a new-generation commercial bank, a teller told our reporter: “US dollars are not currently available, but you can keep following up. Maybe you will be lucky next time.”

However, another customer who had also come to the bank to withdraw foreign currency and received a similar response from the teller told Financial Vanguard: “I think they are keepoperation of their accounts said he had just collected $1,000. The customer added that the maximum amount a customer could withdraw in US dollars over the counter was $1,000, attributing the restriction to the scarcity of the currency. CBN moves to curb practice Speaking to Financial Vanguard at the weekend, a source close to the CBN said the apex bank was already aware of the situation and was putting together measures to curb what the source described as an illegal practice by some banks. The source said:“They know what they are doing. They know that CBN would frown at their illegal withholding of customers’ foreign currency.

“So they will offer the lower denomination that you cannot accept and thereby blame you for the failure of the transaction.” The $5,000 withdrawal request cut to $3,000.

At another old-generation bank, a teller told our correspondent who posed as a customer requesting $5,000, that the bank could only dispense $3,000. The teller added that he was not sure the customer would be able to withdraw as much as $3,000, even if he returned the following day.

At another bank, a new-generation commercial bank, a teller told our reporter: “US dollars are not currently available, but you can keep following up. Maybe you will be lucky next time.”

However, another customer who had also come to the bank to withdraw foreign currency and received a similar response from the teller told Financial Vanguard: “I think they are keeping it for some of their special customers. One of my friends told me to come here because he just collected $4,000 today.”

At another new-generation bank on Victoria Island, Lagos, where a teller told our reporters that US dollars were unavailable, a customer said he had just collected $1,000.

The customer added that the maximum amount a customer could withdraw in US dollars over the counter was $1,000, attributing the restriction to the scarcity of the currency.

Speaking to Financial Vanguard at the weekend, a source close to the CBN said the apex bank was already aware of the situation and was putting together measures to curb what the source described as an illegal practice by some banks.

The source said: “The Central Bank of Nigeria has received several complaints from the general public alleging difficulties in withdrawing cash from their domiciliary accounts, even when withdrawals are made in accordance with the applicable requirements for the operation of their accounts.

“These complaints include reports of practices and arrangements that may impede the timely and convenient fulfilment of legitimate withdrawal requests.”

Circular may be issued soon

Hinting that an investigation was ongoing, the source said a circular would soon be issued advising banks “to desist from practices that unnecessarily restrict or delay legitimate cash withdrawal requests, which create an impression of banking distress.”

He added that banks would be directed to review their current practices and take immediate steps to ensure that legitimate withdrawal requests were appropriately honoured.

Banks accused of trading with forex cash

Many informed banking sources told Financial Vanguard that some banks might be trading with the foreign currency cash available to them instead of dispensing the funds to customers, thereby generating significant earnings.

The development has heightened concerns among customers who operate domiciliary accounts and expect to have reasonable access to their legitimate foreign currency deposits when they make withdrawal requests in accordance with applicable banking requirements.