Forex hoarding: Banks, BDCs risk sanctions – CBN

…As ABCON kicks against new directives
The Central Bank of Nigeria (CBN) has threatened to sanction banks and review operating licences of Bureau de Change (BDCs) that fail to sell foreign exchange to travelling customers on demand.

The CBN’s Acting Director, Corporate Communication, Mr Isaac Okorafor, said that possession of relevant valid travel documents such as visa and ticket are sufficient for immediate over the counter transactions.

In a statement made available in Abuja on Sunday titled “Sale of Forex exchange to Travelers Over the Counter”, Okorafor said “in order to ensure that eligible travellers are able to access foreign and make liquidity available in the market, the CBN wishes to make the following release:

“All-Deposit Money (DMBs) are mandated to buy and sell foreign exchange to travellers (both customers and non-customers) upon presentation of relevant valid travel documents such as visa and ticket OVER THE COUNTER. All travellers shall be attended to immediately at the banks’ counters. Any contravention shall be sanctioned by the CBN.

“All BDCs shall henceforth access forex from the CBN on Mondays, Wednesdays and Fridays. It is compulsory that all BDCs access forex at least three times weekly.

“Any BDC that fails to access the forex window at least three times weekly shall have its licence reviewed by the CBN.”

The apex bank added that compliance was compulsory for all banks and BDCs.

But giving the position of the BDCs on the new directive by the apex bank, Alhaji Aminu Gwadabe, President, Association of Bureau de Change Operators in Nigeria (ABCON), faulted the CBN directives. He added that the regulator should review the BDC’s dollar purchase rate to align with rate commercial banks’ buying rate.

ABCON President said in a statement made available on Sunday that CBN’s directive mandating BDCs to make such purchases is not in line with global best practices and should be put on hold.

He said: “The CBN’s directive at this time of our operational difficulties is no doubt precarious and vague and was intended to emasculate a sector that has helped the system to stabilise and thus unacceptable”.

Gwadabe said the regulator should first merge BDC dollar buying rate with that of commercial banks and also pay ABCON disbursement fees as it is practiced globally. For instance, Travelex also collects forex disbursement fees from the CBN.

The ABCON boss also urged BDC operators to remain calm and wait for executive engagements with the CBN and further communication on the issue in due course.

Gwadabe also recommended that the CBN cuts the three market days for buying dollars to two at $30,000 per market day.

He said, “The rate between the banks and DBCs should be merged for uniformity and fairness. A situation where the banks buy dollar from the CBN at lower rate than the BDCs is not helping the market stability drive.

Besides, ABCON should be considered for disbursement fees like Travelex in the collection centres to ameliorate the new assignments”.

Operators, he said, insist that making Fridays as market day and funding same day will be difficult to achieve and therefore should be discouraged.

Gwadabe assured the CBN of ABCON and BDC’s continuous support in enabling the regulator achieve its core mandate of ensuring exchange rate stability and liquidity access.

Gwadabe also added that: “The BDC sector is confronted with many challenges such as multiple exchange rate, abnormal bank charges, Value Added Tax (VAT) and Commission on Turnover (COT), parallel market operators and illegal International Money Transfer Operators (IMTOs), porous international boarders, complex documentation requirements and poor capacity/ skills of operators.”

The Daily Times recalls that the apex bank had last week advised customers who were refused forex sales by banks to report to CBN for immediate action.

It said, “The CBN has gathered that some banks are turning back customers that come to purchase BTA/PTA and forex for pilgrimage.

“We hereby appeal to bank customers to go straight to their banks to buy forex as the CBN has supplied enough forex to the banks to meet needs in the invisible segment.

“Customers are hereby enjoined to report any bank that refuses to attend to their legitimate demand within 24 hours”, the apex bank stated and advised such customers to call 07002255226.