Top Nigerian banks such as Stanbic IBTC Bank Ltd and Zenith Bank Plc are reportedly about to start limiting how much their customers can withdraw/spend when in foreign lands, using their debit cards.
Specifically, Stanbic IBTC Bank said that starting from today (Monday, July 20th, 2020), each of their customers will only be able to spend $500 per month in terms of offshore card transactions. A monthly limit of $100 has also been placed on withdrawals.
Similarly, Zenith Bank Plc said it will be suspending the use of debit cards for cash withdrawals abroad, albeit temporarily. The monthly sending limit for card users abroad was also slashed by the tier-1 bank to $200.
Meanwhile, other banks such as Ecobank Nigeria and Fidelity Bank Plc have also reportedly reduced their monthly cash withdrawals for their customers when using their cards in places outside of Nigeria.
Why is this happening now?
Well, Nairametrics understands that these banks are simply trying desperately to conserve the dollar in their disposal while limiting foreign currency settlement risks. Reuters had even quoted Zenith Bank as saying that “this review is in response to today’s economic realities,” as it advised its customers to consider processing their prepaid dollar cards.
The backstory to this development
The Central Bank of Nigeria (CBN) has been trying hard to conserve Nigeria’s foreign reserves which have reportedly declined by as much as 19% in 2020 alone. Nigeria’s FX troubles are connected to a myriad of issues, including reduced dollar inflow into the country due to lower crude oil prices, as well as the negative econonmic impacts wrought by the Coronavirus pandemic.
Last week, Nigeria’s apex bank took a hard-line decision to depreciate the naira on the official market. This decision is said to have prompted the currency to weaken on the parallel market and other black-market spots.