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CBN moves to ease cash crunch, directs banks to collect old naira notes from its branches

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By Samuel Bankole

On Wednesday, hope that the current naira scarcity in the banking system will ease soon emerged as banking sources said the regulatory bank may release additional old naira notes to the public through banks for onward disbursement to customers.

It was learned that the Central Bank of Nigeria (CBN) has instructed commercial lenders to approach its state branches to collect old naira notes to enable them to meet their customers’ needs.

The CBN launched the new naira notes on December 15 under its currency redesign programme to curb counterfeiting and help manage monetary policy in its bid to tighten liquidity in the system and curb inflation.

The regulatory bank embarked on the redesign of the N200, N500, and N1,000 banknotes last year and released them to the public on December 15 and gave a January 31 deadline for phasing out the old notes.

READ ALSO: Nigeria’s naira firms on official, parallel forex market despite shortages of dollar

The CBN later extended the deadline to February 10, after which the old notes will cease to be legal tender. It also directed bank customers to return all the old banknotes in their possession after the February 10 deadline to its branches.

However, with the intervention of the Supreme Court, which extended the legal tender status of the old banknotes to December 31, 2023, the CBN subsequently directed banks to continue to dispense the old notes to members of the public.

Despite the directive of the CBN, many banks have run out of both the old and the new banknotes, causing major hiccups in the system, coupled with the glitches being experienced through the e-payment channels.

But, sources in the CBN said banks have been instructed to collect the old Naira noted they deposited in the CBN so that they can ease the pressure in the system.

The sources said the pressure in the system may soon ease as the intention of the CBN is to ensure that banks have enough banknotes to dispense to their customers.

In a note to clients on Wednesday, the Chief executive of Financial Derivative Company (FDC), Bismarck Rewane projected that the cash shortage is expected to ease by next month.

“Before the next MPC meeting in May, we expect cash in circulation to increase, enabling business and consumer transactions. ATM queues will begin to reduce and over-the-counter cash will be available at banks,” Rewane wrote in a note to clients.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com, Newsroom +234 8033 964 138)

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