CBN lifts cash deposit restriction on domiciliary accounts, allows $10k withdraw

CBN Removes Cash Deposit Restriction on Domiciliary Accounts, Permits Daily $10k Withdrawals

The Central Bank of Nigeria (CBN) has issued new guidelines to Deposit Money Banks (DMBs) regarding operational changes in the foreign exchange market. These policy changes aim to enhance transparency, liquidity, and price discovery in order to improve supply, discourage speculation, boost customer confidence, and ensure overall stability.

The guidelines include several key provisions, such as allowing all visible and invisible transactions to be eligible for the Investors’ and Exporters’ window, granting unrestricted access to funds in ordinary domiciliary accounts, and permitting cash deposits up to $10,000 per day or its equivalent via telegraphic transfer.

In a press statement released on June 18, 2023, the CBN provided further details on the operational changes discussed during an extraordinary Bankers’ Committee meeting. The central bank emphasizes that the goal is to promote transparency, liquidity, and price discovery in the foreign exchange market, leading to increased supply, reduced speculation, enhanced customer confidence, and overall market stability.

The key points outlined in the guidance are as follows:

1. All visible and invisible transactions, including medical expenses, school fees, BTA/PTA, airline remittances, and others, are eligible for the Investors’ and Exporters’ (I&E) window.

2. DMBs are required to ensure prompt processing of eligible invisible transactions on behalf of their customers using the applicable rate at the I&E window.

3. Ordinary domiciliary account holders will have unrestricted access to funds in their accounts.

4. Domiciliary account holders can utilize cash deposits up to $10,000 per day or its equivalent via telegraphic transfer.

5. DMBs must provide returns to the CBN, including the purpose of such transactions.

6. Cash deposits into domiciliary accounts will not be restricted, provided DMBs comply with proper KYC (Know Your Customer) and due diligence, and adhere to existing AML/FT (Anti-Money Laundering/Combating the Financing of Terrorism) laws and regulations.

7. The CBN will prioritize the orderly settlement of committed FX forward transactions to further enhance market confidence.

8. The Bank will normalize its Cash Reserve Ratio (CRR) maintenance processes and ensure equitable implementation across the banking industry.

The CBN reassures the banking public of its commitment to maintaining a stable and efficient foreign exchange market that serves the needs of all legitimate users.

Implications of the changes:

Regarding cash deposits, there was previously a restriction on the amount of cash Nigerians could withdraw from their domiciliary accounts. The restrictions led to confusion as individuals were uncertain about the withdrawal limits, with weekly or monthly limits imposed based on the prevailing CBN policies.

However, this has now changed, allowing individuals to withdraw or transfer up to $10,000 per day from their domiciliary accounts. It’s important to note that there is no limit on “inflow” or wired transfers into deposit accounts.

This new directive will be welcomed by Nigerians who have faced difficulties accessing their cash deposits in domiciliary accounts due to the previous restrictions. The move is expected to improve liquidity in the forex market as more people will be encouraged to deposit their foreign currency into banks.

Additionally, the removal of cash deposit restrictions enables Nigerians with domiciliary accounts to use their debit cards abroad without concerns of limitations. Overall, this development is likely to have positive effects on the economy, addressing previous challenges and providing individuals with greater flexibility in managing their funds.