The Central Bank of Nigeria on Wednesday announced that it would be redesigning the ₦200, ₦500, and ₦1,000 notes. Godwin Emefiele, the CBN governor, disclosed this at a press briefing.
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According to the apex bank, the new notes will begin circulating on December 15, 2022. However, the old notes will remain in use until January 31, 2023.
Emefiele explained that the CBN was taking this step to combat a number of economic challenges faced by the country. They include the hoarding of naira notes outside of bank vaults and the proliferation of counterfeit naira notes. The bank intends to establish greater control over the currency’s circulation and tackle rampant inflation.
The CBN also says that it intends to limit the supply of naira notes, as a precursor to driving a more aggressive cashless policy. In addition, it has indicated that the note replacement exercise will enable it to tackle the hoarding of large amounts of cash by kidnappers, and the shadowy financing of terrorism.
Here are additional facts you should know about the CBN’s redesign of selected naira notes:
The Role Of Banks In The Exercise
Deposit Money Banks (DMBs) will be the outlets through which the new notes will be provided to Nigerians.
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The CBN has ordered them to begin receiving deposits of the old naira notes from customers, in the lead up to their being voided by the end of January 2023. The CBN has also asked them to begin returning old notes to it. Banks will commencewith providing the new notes to the public on December 15, 2022.
Verification Measures
Banks will only accept cash deposits from people with bank accounts and whose identities they are able to verify via KYC (Know Your Customer) criteria. Cash will only be paid into customer accounts. The CBN forbids banks from paying cash deposits into ledgers and suspense accounts (i.e. accounts that temporarily hold money transactions with no valid account numbers).
Bank Charges For Deposits Suspended
The CBN has ordered banks to suspend bank charges for cash deposits with immediate effect. As such, no customer will pay extra fees for returning the old notes in their possession or paying them into their accounts. However, single deposits exceeding ₦150,000 will still attract cash processing charges.
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Prior to the CBN’s directive, customers were levied a stamp duty of ₦50 for bank deposits, a 7.5% VAT, and a commission for each deposit.
Banks Open To Receive Cash
Banks’ currency processing centers will remain open From Monday to Saturday in order to attend to customers who will be returning cash.
CBN And EFCC Will Track Deposits
The CBN will be monitoring deposits in collaboration with the Economic and Financial Crimes Commission (EFCC). Both entities will track the exercise to detect what they consider suspicious patterns in deposits initiated by individuals or organizations. Such patterns may indicate the laundering of illegal proceeds. The EFCC Chairman, Abdulrasheed Bawa, has indicated that the commission will be on the lookout for currency speculators and BDCs that may try to undermine the exercise. The CBN and EFCC will mete out punishment to banks that receive cash from non-account holders.
Intended Effect On Financial System
Ultimately, the CBN wants the reissuing of bank notes to drive the adoption of digital banking in Nigeria. In line with this aim, it will henceforth be limiting the volume of cash that’s available to the public. Reports suggest that it’s set to announce a new cashless policy in 2023. Banks may benefit from this push, as it could encourage more people to open accounts and patronize local bank branches.
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