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CBN takes proactive step by introducing Clean Notes Policy

he Central Bank of Nigeria (CBN) has introduced the clean note policy, aimed at putting an end to the circulation of mutilated, defaced, and unfit notes.

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Mutilated naira notes, CBN

The Central Bank of Nigeria (CBN) has introduced the clean note policy to put an end to the circulation of mutilated, defaced, and unfit naira notes. This information is contained in the Clean Note Policy Document which was released by the apex bank, detailing several sanctions to be meted to defaulting banks and the general public.

Note that the Nigerian Currency Structure comprises of eight banknotes and three coin
denominations in circulation which are: the N1000, N500, N200, N100, N50, N20,
N10, and N5 banknotes, as well as N2, N1, and 50k coins.

According to the CBN,  the Clean Note Policy aims at ensuring that the banknotes in circulation are of high quality, in order to guarantee public confidence in the naira.

Earlier Developments: A large proportion of the notes in circulation in Nigeria are dirty, mutilated, and unfit for ATMs and over-the-counter payments. Over the years, there have been increasing numbers of dirty and unfit currencies in circulation, a situation that has become a source of concern to Nigerians.

The recurring decimal of an increasing amount of dirty and mutilated currencies has also elicited widespread criticism of both commercial banks and the Central Bank of Nigeria. On several occasions, there have been reported cases of dirty and unfit currencies being issued by Deposits Money Banks (DMBs).

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A bank customer and lawyer reportedly described the alarming rate of dirty notes in circulation as embarrassing. According to the customer:

“I observe that in spite of arrest and subsequent prosecution of the culprits, there is still a cartel in CBN and commercial banks, which make brisk business recycling old naira notes meant for destruction”

CBN and banks blame each other: Meanwhile, both the CBN and deposit money banks (DMBs) have disappointingly traded blames over who is responsible for mutilated currencies in circulation. The CBN has blamed DMBs for deliberately mixing unfit and new notes available in circulation, and re-circulating dirty/unfit currencies instead of sorting out the bad ones and returning them to CBN.

However, the DMBs have also  that the claimed that CBN’s delay to credits their accounts with cash deposited by them, couple with huge cash handling/sorting costs by the apex, are some of the major contributory factors to the problem.

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A look at CBN’s statutory obligations on clean notes: Among other statutory obligations of the CBN is to ensure an adequate supply of clean banknotes to facilitate seamless payment and settlement of transactions by the public, Government, and banks.

“Section 2 of the CBN Act, 2007 vests the issuance of legal tender currency on the Central Bank of Nigeria (CBN). The task entails design (including security features), production, and distribution of newly printed notes and fit notes as well as replacement of unfit banknotes which are destroyed or older series withdrawn from circulation.”

The CBN stated that despite the prevalence of electronic forms of transactions,
cash remains “king” for day to day economic transactions. This is because Nigerians still prefer to use cash to payments, especially where there are no digital payment platforms.

About the CBN’s Clean Note Policy: According to the CBN, the Clean Note Policy is aimed at ensuring that the banknotes in circulation are clean and of high quality.

It entails a spectrum of diverse currency management activities geared towards the efficient circulation of premium quality banknotes and withdrawal of unfit/soiled banknotes, to guarantee public confidence and usage of the naira banknotes as a medium of exchange.

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“This policy is intended to be used by the public and major cash handlers such as DMBs, Micro Finance Banks, third party service providers, etc.”

Note that the policy will remain open for future amendments in tandem with emerging currency management issues.

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CBN takes the center stage: The apex bank stated in its clean note policy document that in order to enhance the availability of clean notes and effect expeditious withdrawal of dirty notes from circulation, DMBs and CPCs shall now classify their deposits into fit and unfit notes. According to the CBN:

“An unfit banknote refers to a genuine banknote that is no longer fit for circulation in accordance with the quality standard set by the Central Bank of Nigeria.”

 

Re-Circulation of Banknotes and Penalty to defaulter: CBN stated that to ensure that the banknotes in circulation are clean and of good quality, DMBs shall ensure that they process their banknotes using registered processing companies and classify them into fit and unfit.

“a penal charge of N12,000 per box, or any amount determined by the Management of the Bank, shall apply for the deposit of unsorted banknotes. In addition, penalties as may be determined by the Bank, shall apply for the recirculation of unfit banknotes.”

Abuse of naira notes and penalty to offenders: According to the CBN, the DMBs, other financial institutions, and the general public must, henceforth, desist from acts that are injurious to the naira. Otherwise, they will be penalised.

“Offenders shall be liable to a fine of fifty thousand Naira or six months imprisonment or both under the provision of Section 21 of the CBN Act, 2007.”

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Hospitality & Travel

COVID-19: Over 70% of jobs lost in aviation, tourism industries in 2020 – AfDB

The AfDB has stated that about 5 million jobs have been lost in the aviation and tourism industries in Africa due to the COVID-19 pandemic.

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Aviation in Africa

About 5 million out of Africa’s 7 million aviation and tourism industry-related jobs have been lost in 2020. Also, as much as $15 billion in revenue, half of this to African airlines.

This was disclosed by the African Development Bank (AfDB) in a statement issued and seen by Nairametrics on Friday.

Vice President for Infrastructure, Industrialization and Private Sector, AfDB, Solomon Quaynor explained that the pandemic’s effect was felt more in Africa, a claim that was backed up by numerous panelists at the just concluded AfDB’s webinar themed ‘African Aviation Recovery Conference: coordinating an efficient response to the COVID-19 crisis’s effects on the Aviation sector in Africa.’

He said, “The air transport system is really at the forefront of all our collective objectives to realize Africa as a single economic bloc. The centrality of the aviation sector to Africa’s long-term goals by referencing three flagship projects of the AU’s Agenda 2063 that aim to advance open skies and closer connectivity: SAATM, The African Continental Free Trade Area, and the African Passport-Free movement of people.

“The air transport system is really at the forefront of all our collective objectives to realize Africa as a single economic bloc of 1.3 billion people with a GDP of almost 3 trillion dollars, for which we want to begin to really focus and increase trade among ourselves, as well as investment.”

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Also at the event, Minister of Aviation, Hadi Sirika called on African governments to embrace full liberalisation of the aviation sector, invoking the Yamoussoukro Decision, which established an arrangement for the gradual liberalization of intra-Africa air transport services.

He said, “Nigeria today has all its bilateral air service agreements with the YD and was also among the first ten countries that signed a commitment to implement the Single African Air Transport Market.”

Dr. Amani Abou Zeid, African Union Commission for Infrastructure and Energy, explained that Africa’s aviation industry represents a huge market that the continent’s airlines need to exploit more fully, with technology and AI offering the way forward for expansion, regional development experts.

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“Technology and smart technologies are offering this fantastic opportunity, so let’s make use of AI, let’s make use of the Internet of Things, let’s capacitate our people to revamp and to rethink our industry, to make sure that both our airports and our airlines cater for the very near future,” said Zeid.

What they are saying

A key takeaway was the urgent need for coordinated action among the sector’s actors, including governments, aviation authorities and multilateral stakeholders such as the Bank.

“The time is now. All of us who have really been working on upstream issues such as SAATM, the World Bank, ourselves, the AU and others, now is the time to really pool our advocacy and resources to make this happen once and for all because if we continue to operate as a federation of 54 states as opposed to an integrated market, our economies will continue to be sub-optimal,” said Quaynor

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Energy

Autogas: Nigerians will not pay N250,000 for conversion, it is free – FG

The FG has clarified an earlier statement about Nigerians having to pay N250,000 to have their vehicles converted from diesel/fuel use to autogas.

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FG says vehicle owners to pay N250,000 to convert from petrol to autogas

The Federal Government has said that news reports of Nigerians having to pay N250,000 to convert their cars from diesel/petrol engines to gas is false and incorrect.

This was disclosed by Justice Derefaka, the Technical Adviser on Gas Business and Policy Implementation to Minister of State for Petroleum, Timipre Sylva, to newsmen on Friday.

On Friday, Derefaka clarified his position as wrong and said the FG plans make the conversion for free. He added that the FG plans to convert 1 million vehicles for free by the end of 2021.

“I granted an interview on Channels Television, where I stated the auto conversion of vehicles to gas will amount to N250k and Nigerians will need to pay for that. That statement is not correct, it is wrong.

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“On that note, I will like to state the position that has been made by my boss, Timipre Sylva, that FG will convert those vehicles for free for Nigerians, and we are looking at 1 million vehicles by the end of 2021,” he said.

What you should know 

  • Nairametrics reported earlier this week that  Justice Derefaka had said vehicle owners in the country would have to pay N250,000 to have their cars converted to autogas from petrol.

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Coronavirus

COVID-19: Moderna says it will produce 500 million vaccines by 2021

Moderna Inc, has said that the company has the capacity to produce up to 500 million coronavirus vaccines by 2021.

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Moderna COVID-19 vaccine passes safety test on animals

Stéphane Bancel, CEO of pharmaceutical company and Covid-19 vaccine maker, Moderna Inc, has said that the company has the capacity to produce up to 500 million coronavirus vaccines by 2021.

The CEO disclosed this at the Nasdaq Investor Conference, as reported by Reuters.

What you should know 

  • Nairametrics reported last month that the pharmaceutical company had stated that its Covid-19 vaccine was 94.5% effective in treating coronavirus, after preliminary analysis of a large late-stage clinical trial.
  • UK Health Secretary, Matt Hancock announced in November that the UK had secured 5 million doses of the vaccine.

The company disclosed that they had applied for emergency use of the vaccine in the United States and EU after finalizing clinical trials which showed 94.1% efficacy, and would hold a December 17 meeting with the American Food and Drug Administration to discuss emergency use.

For 500 million, I am very comfortable we are gonna get there (2021),” Bancel said at the Nasdaq Investor Conference.

The CEO added that the price for its vaccine would remain at $37 per dose, but expected it to fall to $25 as purchase volumes rose.

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Moderna says up to 125 million doses of its Covid-19 vaccine will be supplied globally by the first quarter of 2021.

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