Dollarisation: Banks peg domiciliary account balance at $10,000

 

In an apparent move to check the trending dollarisation of the Nigerian economy and cut down huge dollar liquidity in the system, banks are now directing their customers to keep to a maximum of $10,000 balance in their domiciliary accounts.

A bank customer told BusinessDay on Monday that following the directive of his bank, last week, he has withdrawn $2,000 which was the excess on the $10,000 he had in his account before that directive came.

The customer said he received the following text from his bank- “…Dear customer, be advised that you cannot keep more than $10,000 balance in your domiciliary account, otherwise, the excess would be subjected to 10% charge weekly.”

BusinessDay could not get a reaction from the banks that sent out those directives, but a bank top staff confirmed such development in other banks, but said his institution was yet to receive any advice on the matter.

Ibrahim Mu’azu, CBN director, corporate communications, told BusinessDay that he was not aware of such directive, but that whatever it is would be clarified at the MPC meeting. “I am not aware that the CBN issued such directive, maybe the banks are looking for revenue or running away from something. Whatever, it will be clearer probably after tomorrow’s meeting,” Mu’azu stated.

There are, however, indications that CBN governor, Godwin Emefiele, may have gotten President Goodluck Jonathan’s backing to implement some tough policies, as long as they are useful in saving the naira.

Regular and huge dollar spending, including for shopping, gifts, school fees, rent, which are now demanded in dollars, has been a serious concern for the CBN, due to the huge demand pressure it exerts in the FX market and then on the naira.

Last week Tuesday, the CBN held meetings with banks on the unhealthy dollarisation of the economy. It was learnt that the CBN was disappointed that banks were not implementing its directives to the letter, but were interpreting the circulars to suit their own purpose.

The issue and the attendant impact on the naira, especially unstable exchange rate at the parallel foreign exchange market, is also expected to dominate discussions at the CBN’s two-day Monetary Policy Committee (MPC) meeting which began on Monday.

But at the last meeting in March, Emefiele raised concerns over the wide divergence between the interbank and the bureau-de-change exchange rates, which provides an avenue for arbitrage and speculative activities in the market.

He particularly noted with concern the phenomenon of currency substitution and partial dollarisation in the economy, a development which, he said, may have significantly fuelled the high demand for foreign exchange.