Deposit Money Banks in Nigeria say they have sufficient foreign exchange to supply customers to settle their obligations even in rural areas.
The Body of Bank Chief Executives gave the assurance on Thursday after the Central Bank of Nigeria halted sale of dollars to Bureau de Change operators, a move aimed at easing pressure on the country’s weak currency.
The executives including Herbert Wigwe, Managing Director of Access Bank Plc, Segun Agbaje, MD Guarantee Trust Holding Company, Tomi Somefun MD of Unity Bank, Yemisi Edun MD of First City Monument Bank and Patrick Akinwuntan MD of Ecobank said this at a virtual meeting titled, ‘CBN Regulation on BDC.’
The regulator has been under severe pressure to save the naira from further devaluation, but the Bureau de Change operators are involved in rent seeking and enabling money laundering, according to the Central Bank Governor, Godwin Emefiele. The apex bank now wants the BDCs to source their dollars autonomously.
Access Bank boss Wigwe said DMBs have other avenues of generating forex to meet their obligations outside the apex bank’s interventions.
Wigwe said, “Most of these dollars are actually coming from the central bank. Ideally, we should look at other sources of dollars that come into the system.
“I think today the central bank does about a 100 million dollars a week, are they going to increase it? is anybody’s guess, but I think that banks actually have their own resources to put on the table, most of the banks receive dollars on a daily basis coming in from various sources.
“Who said we can’t give those dollars out, so it is also available, I think there is some flexibility and the banks can also use their own resources up to a specific limit to basically augment what the central bank has provided.
“So, whether the central bank increases the amount it releases to the market for the purposes we are talking about, the bank does have the capacity to use their funds from alternative sources to support what has been provided.”
He said banks would leverage regional structures to enable rural area dwellers to have access to forex.
The Access Bank boss said, “I think most commercial areas will have it and banks will try and go as far as possible as they can to provide these services.
“You know when you go to remote areas you go with a vault, will you keep a vault with cash overnight in very remote villages, the answer is very unlikely.
“Banks are going to use their regional structure to ensure that residents of the rural area do not have to go far from the rural area to be able to get the cash.”
According to him, banks might adopt slight modifications in foreign exchange transactions, but assure that generally requirements would not change.
“If you are taking PTA, you know exactly what to prong, you need to bring your passport and ticket, if it is school fees, you need to get an invoice from the school. Those are the things that are standard, but obviously little tweaks, depending on the size and network of a bank,” he said.
Wigwe disclosed that banks have started deploying the needed infrastructure including dedicated tellers in the branches to sell FX to customers.
The Managing Director of GTHolding, Agbaje in his remarks said banks have no intention to set up individual BDCs.
In his words, “There really isn’t any need for us to set up BDCs. We already have foreign exchange licenses which is what BDCs have, so we have the infrastructure without creating separate entities like the BDCs. So, I don’t believe any bank will take the risk of setting up a separate BDC.”
*culled from the Whistler