CBN Prepares Measures to Curb Banks' Limits on Forex Account Withdrawals

The Central Bank of Nigeria is reportedly getting ready to intervene so that commercial banks cannot block customers from accessing foreign exchange sitting in domiciliary accounts. The move follows complaints that account holders have struggled to take out funds. The apex bank is anticipated to compel lenders to process legitimate withdrawal requests and release foreign currencies to customers who meet the rules governing such accounts. The development comes after complaints that certain banks have capped or otherwise constrained cash withdrawals in foreign currencies, particularly US dollars and British pounds. Inspections at multiple banks in Lagos reportedly indicated that the policies differ from one institution to another. Some lenders limit how much a customer may take per transaction, while others claim that foreign currency notes are not on hand. Reports also indicated that some banks provide only smaller bills, such as $20 notes. Customers alleged that this approach was designed to dissuade them from completing withdrawals. According to one banking source, such tactics let banks look as though they are following CBN rules while still making it hard for customers to reach their foreign currency deposits. At one old-generation bank, a teller reportedly informed a customer who wanted $5,000 that only $3,000 was available. The teller also said it was unclear whether the customer could obtain another $3,000 by returning the next day. At a different commercial bank, a teller reportedly said US dollars were not available and told the customer to keep checking. But another customer at that bank alleged that foreign currency was being set aside for certain clients, saying a friend had withdrawn $4,000 from the branch earlier that same day. At a new-generation bank located on Victoria Island, Lagos, a teller reportedly said US dollars were unavailable. Another customer, however, said he had just withdrawn $1,000. That customer claimed $1,000 was the highest amount dispensed over the counter because the currency was in short supply. A source close to the CBN said the regulator was aware of the complaints and was weighing steps to confront what the source called an unlawful practice by some banks. The source said the CBN had 'received several complaints' from members of the public who said they had trouble withdrawing cash from domiciliary accounts, including when the withdrawals met the rules for operating those accounts. The complaints, according to the source, include reports of practices and arrangements that could prevent legitimate withdrawal requests from being fulfilled promptly and conveniently. The source said an investigation was underway and suggested the CBN might soon issue a circular instructing banks to halt practices that needlessly restrict or delay legitimate cash withdrawals in foreign currencies. Banks are also expected to be told to reassess their procedures and act immediately to make sure legitimate withdrawal requests are properly honoured. Some banking sources further alleged that certain banks might be using foreign currency cash deposited by customers to conduct trading activities rather than keeping the funds available for withdrawal, which would let them earn extra income. That allegation has not been independently confirmed. The restrictions reported have sparked concern among domiciliary account holders, who expect reasonable access to their foreign currency deposits when withdrawal requests meet applicable banking requirements.