Fresh facts emerged over the
weekend that despite the adoption of a single interbank foreign exchange
(forex) market, some deposit money banks have ignored the demand and
supply-determined exchange rate at the interbank market for dollar transactions
on Naira Debit Cards (NDC) in cross
border transactions.
Cross border transactions
are payment for goods and services or cash withdrawal through Automated Teller
Machine (ATM) outside the country through debit cards linked to naira account
in Nigeria.
These banks NIGERIAN TRIBUNE
says have continued to charge rates close to that of parallel market for such
transactions.
A surprised investment
banker who preferred not to be named told Nigerian Tribune that it seems the
banks want to quickly make all the gains they could from customers before CBN’s
attention could be drawn to that area.
“We observed that some
deposit money banks continued to charge rates close to parallel market rates
for dollar transactions on naira debit cards abroad. At the parallel market,
the naira traded at N345/$1.00 on most days during the week, save for Wednesday
when it appreciated to N335/$1.00.
“But banks which naira debit
cards were used for dollar transactions charged rates as high as N320 whereas
the highest market determined rate at each 2pm closing day of last week was
N284 to a dollar.”
It should be recalled that a
couple of weeks before the introduction of the new forex policy, Banks
protested to the Central Bank of Nigeria (CBN) over harassment of their staff by the Economic and
Financial Crimes Commission (EFCC).
They claimed their staff
were been harassed over foreign exchange rates charged for cross border
transactions on Naira Debit Cards (NDC).
The normal practice is that
Deposit Money Banks set the card rates based on a daily market competitor scan,
thereby leaving market forces to dictate what the banks can charge their
customers.
Investigation revealed that
the EFCC in recent times arrested some bank staff based on petitions by card
holders accusing banks of charging parallel market exchange rates for cross
border transactions via naira debit cards.
However, in a protest letter
to the CBN, the banks dismissed this accusation, saying that since the dollar
for settlement for such transactions are not sourced from the CBN but from
autonomous sources, they cannot use CBN rate to settle such transactions.
However, the thinking of
most industry watchers is that under the
new forex policy, banks cannot continue to claim that they bought dollars from
autonomous sources since the CBN guideline has introduced a single market
structure whereby, even the players at the autonomous market are incorporated.
The CBN guideline says: “the
CBN shall operate a single market structure through the automotive/interbank
market, with the CBN participating in the market...”
In the letter titled, “Harassment
of banks by the Economics and Financial Crimes Commission over charges on FX
Card Rates”, sent to the CBN on April 28, 2016, the banks complained that, EFCC
has been going to banks and arresting staff of banks stating that card rate for
cross border transactions should not be more than the CBN rate plus a margin of
N0.50.
Two different bank customers
Sanyaolu and Edward Kwusue who spoke to Nigerian Tribune said they expect banks
to charge interbank spot (current) rate plus a margin of N0.50 or the previous
day’s closing rate plus a margin of N0.50
The banks had stated in
their letter: “As you will recall sir,
the Central Bank of Nigeria does not sell foreign exchange (FX) to banks for
settlement of international cards schemes for the cross border spend on our naira debit card, most banks
have had to be sourcing FX from autonomous market.
“At several meetings of the
CBN with Deposit Money Banks, it was reiterated that we need to protect the
scarce FX of the country and limits were placed on cross border spend of naira
debit ($300/ day for ATM withdrawal and
a total of N50,000 p.a for ATM and Point of Sale ( PoS) purchase per card).”
Bank customers travelling with appropriate document can
access the PTA window at $4,000 per quarter.
As the sole regulator of
banking practice in Nigeria, the card users are calling on the CBN to urgently
take steps to call the banks to order.
Credit: Nigerian Tribune
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