INTRODUCTION
In March 2024, there was a significant improvement in Nigerian Naira as against the US Dollar. The last day of trade in March being Friday 29, 2024, the dollars closed at $1309/USD against that of February which was at $1595/USD which represents a 21.8% gain. This is majorly attributed to several policies, strategies, and interventions by the Central Bank of Nigeria (CBN) to stabilize the economy. We have provided a summary and implication of the policies below:
1. LATE AND NON-RENDITION OF STATUTORY MONTHLY RETURNS TO THE CENTRAL BANK OF NIGERIA THROUGH THE FinA APPLICATION PUBLISHED ON MARCH 05, 2024
In three (3) circulars dated March 05, 2024, directed to Micro-Finance Banks (MFB), Primary Mortgage Banks (PMBs), and Development Finance Institutions (DFIs) respectively, the CBN emphasized the need for prompt and timely submission of statutory monthly returns through the FinA application as statutorily provided under section 24 of Banks and Other Financial Institutions Act (BOFIA) 2020. They noted that banks are reminded to submit their monthly FinA returns on or before the 5th day after the month's end and where the 5th day falls on a weekend or public holiday, the returns are to be made the previous workday. Additionally, CBN warns that failure to render consequent monthly regulatory returns timely may attract penalties.
2. THE REVISED GUIDELINES FOR BLACKLISTING FOR BANKS AND OTHER FINANCIAL INSTITUTIONS IN NIGERIA PUBLISHED ON MARCH 08, 2024.
The guideline revised the 'Review of Operational Guidelines for Blacklisting of Banks and Other Financial Institutions in Nigeria' which was published on June 28, 2016. The guideline was reviewed to take into the account, modifications to the business environment as well as legal and regulatory requirements, and to provide a guide and procedure to blacklisting individuals in Banks and Other Financial Institutions in Nigeria in line with section 47 of Banks and Other Financial Institutions Act 2020.
The revised guideline redefines and expands the scope of offenses covered by the Blacklist. Additionally, it established an Independent Review Panel (IRP) that conducts a second-level review and validation of the decisions of the Financial Institutions to ensure fairness, transparency, and accountability. These efforts by the CBN are designed to guarantee a fair and transparent process, enhancing risk management practices within financial institutions.
3. SUPERSEDED CIRCULARS/ GUIDELINES (REVIEWED) PUBLISHED ON MARCH 12, 2024.
This circular is addressed to Deposit Money Banks, Licensed Non-interest Banks, and Other Authorized Dealers. The CBN places a strong emphasis on compliance and adherence to circulars that supersede previous ones issued by the bank. This circular was on the backdrop of compliance with the directives of the obsolete circulars despite their nullification.
The superseding circulars include:
- Circular to All Authorized Dealers: Access to the
Discount Window dated October 07, 2022, which supersedes
the under-listed:
- Access to the CBN Discount Window on Auction Days dated August 08, 2016.
- Review of the Revised Guidelines for Accessing CBN Lending Window and Repo Transaction dated August 01, 2012
- Revised Guidelines for the Operation of Non-Interest
Financial Institutions' Instruments by the Central Bank of
Nigeria dated June 09, 2022, supersedes the under-listed:
- Introduction of Two New Instruments for Non-Interest Banks dated August 24, 2017.
- Guidelines for the Operation of Non-Interest Financial Instruments by the Central Bank of Nigeria dated December 12, 2012.
- The Guidelines on Accessing the CBN Standing Deposit Facility dated July 10, 2019, and reviewed on October 25, 2023, removed the cap on remunerable deposits.
4. RE: IMPACT OF RECENT FX POLICY REFORMS: PRUDENTIAL GUIDANCE TO THE BANKING SECTOR PUBLISHED ON MARCH 14, 2024.
This letter was addressed to all Banks on the impact of recent foreign exchange policy reforms refers to an earlier correspondence published on September 11, 2023. Banks are urged to exercise utmost prudence with Foreign Exchange (FX) revaluation gains. It also provides specific and precautionary measures to be taken, which is to set aside foreign currency as a counter-cyclical buffer to cushion any adverse movements in the FX rate. Additionally, banks are also prohibited from utilizing FX evaluation gains to pay dividends or meet operating expenses.
This policy aims to mitigate the impact of adverse movements in the FX rate, reduce the risk of exacerbating inflationary pressures, and overall stabilize the FX market and enhance economic resilience.
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