Nigerian banks now reject foreign currency cash deposits

Posted by Felix Okoli on Saturday August 22, 2015 at 8:45:19:

It's really surprising to hear that banks would be rejecting cash deposits into their vaults when this is one of the reason why they setup their business in the first place. In the past, Nigerian banks were finding it hard to give out foreign currencies to their customers but now it seems that they've had enough of it and want no more from people and this has also contributed to the fall of foreign currencies like the US dollar to the Naira.

Nigerians keep foreign currency accounts for a lot of reasons and one of them is toe better secure the value of their funds for the long term. It's a well known fact that Foreign currencies such as the US dollar, British pounds and Euro are a stronger currency than the Naira which has been constantly depreciating for the past 20 years. I still remember when 1 USD equaled about N85 and now we hear it has already fallen to as low as N210 to the dollar. It shows that a person who saves money in the US dollar since the 1990s would have better saved his funds from depreciating than if he saved it in Naira since then. Thats is why some smart Nigerians keep foreign bank accounts and foreign currency accounts otherwise known as domiciliary bank accounts.

It's now no longer business as usual for domiciliary bank account holders as Nigerian banks now reject their foreign currency deposits just to avoid currency risk. What I understand from that is that they don't want to store your money because they are afraid that it may gain more value over the Naira in the long term.

How do you still operate a domiciliary account in Nigeria? Well, you can still receive inflows into Nigeria from abroad. People and friends can still send money to your domiciliary account and you can still make withdrawals in foreign currency from such accounts. I just hope that the CBN doesn't wake up one morning and start saying that domiciliary account holders may only withdraw their money in the Nigerian Naira. I think that would amount to a rip-off and probably a breach of contract.

Personally, I don't think they should have stopped accepting foreign currency deposits since they already have a law that requires them to report the authorities accounts that exceed $10,000. I have to say that this new policy is more bank friendly than customer friendly. It's we the customers that are on the losing end and not the banks who are just more concerned about protecting themselves.