Dollars, Pounds notes
By Obinna Chima
The Central Bank of Nigeria (CBN) has told forex dealers that fail to utilise funds sourced from its Wholesale Dutch Auction System (WDAS) after two days to refund such funds.
The directive becomes effective from today.
The apex bank explained that the directive became necessary in order enhance transparency and efficiency in the use of funds from the WDAS.
The WDAS is also the official market whose supply of forex is regulated by the CBN.
The banking sector regular said this in a circular with reference number: “TED/FEM/FPC/GEN/01/016,” dated July 5, 2012, a copy of which was posted on its website at the weekend.
The circular titled: “Utilisation of Funds Purchased from CBN (WDAS) Window,” addressed to all authorised dealers, was signed by the CBN’s Director, Trade and Exchange Department, Mr. Batari Musa.
It stated: “In order to enhance transparency and efficiency in the use of WDAS funds, authorised dealers are hereby informed of the following guidelines for noting and compliance. With effect from Monday, July 09, 2012, funds sourced from the WDAS shall be utilised within two working days.
“Any unutilised funds after the two workings days from the date of settlement shall be refunded to the CBN for repurchase at the prevailing rate or the rate the funds were purchased whichever is lower.”
According to the CBN, dealers that fail to comply with the directive would be properly sanctioned.
The regulator listed the punitive measures to be applied as: “The refund of the amount to the CBN with interest at London Interbank Offered Rates (LIBOR)+5 per cent; payment of monetary fine in accordance with the provisions of Banks and Other Financial Institutions Act (BOFIA) 1991 (as amended); and any other appropriate penalty.”
It however said that: “The circular supersedes the provisions of paragraph 13 of the one ref no. FMD/FED/CIR/GEN/01/082/10 dated December 29, 2010 on the subject.”
The CBN had in line with its resolve to continue to monitor the flow of forex in the country, last week, reduced the amount of dollar supply to Bureaux De Change (BDC) operators by 33.3 per cent to $50,000 for each firm per week. The volume of forex supplied to the BDCs previously, used to be $75,000 for each operator per week. The CBN insisted that the policy would become effective from July 9, 2012.
The banking sector regulator had also disclosed this in a circular with reference number: “TED/FEM/FPC/GEN/01/017,” addressed to all dealers and BDC operators.