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DMBs assure customers of sufficient forex

Ololade Omosan-Agie

Bank executives have assured that Nigerian deposit money banks have the capacity to provide sufficient foreign exchange to customers in the country.

They gave this assurance at a virtual meeting held on Thursday, themed, “CBN REGULATION ON BDC”, following the central bank of Nigeria’s directive to end forex sales and new licence approval to Bureau de Change operators.
Bank executives present at the meeting were Herbert Wigwe of Access Bank Plc, Segun Agbaje of Guarantee Trust Holding Company, Tomi Somefun of Unity Bank, Yemisi Edun of First City Monument Bank,and Patrick Akinwuntan of Ecobank.

Wigwe who spoke under the auspices of the Body of Bank Chief Executives, argued that DMBs have other sources of generating foreign exchange, besides the CBN, thus whether the apex bank increases its forex allocations or not, banks would be able to make forex available.

He said, “Most of these dollars are actually coming from the central bank. Ideally, we should look at other sources of dollar that comes 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 do have the capacity to use their funds from alternative sources to support what has been provided.”

On accessibility based on location, the MD stated that the banks will leverage regional structures to ensure that residents of rural areas have access to forex.

“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 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.”

He said while there might be slight modifications in foreign exchange transactions with banks, generally the requirements will remain constant.

“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.

He also noted that banks have started implementing the directives of the CBN, by deploying the needed infrastructure including dedicated tellers in the branches to sell FX to customers.

When asked if banks have any intentions to establish individual BDCs, The Managing Director of Guarantee Trust Holding Company said, “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.

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