CBN Warn Banks Against Deposit of Damaged and Dirty Naira Notes| Banks May Soon Reject Your Money

The Central Bank of Nigeria (CBN) has directed all banks to stop collecting bad money from depositors. The apex bank says it would stop receiving deposits of torn notes from Deposit Money Banks (DMB) as part of its plan to cut the cost of replacing old and dirty currencies.

In a statement issued in Abuja by the director of currency operations department of the CBN, Ahmed Umar, the bank said that it has seen an increase in several dirty notes circulating in the country and that such an increase falsifies the true value of the Naira and acts as an avenue for fraud.

CBN Warn Banks Against Old and Dirty Naira Notes Deposit | Banks May Soon Reject Your Money

"The management of the Central Bank observed with concern the increasing number of composed banknotes deposited by DMBs and request for replacement of such banknotes by members of the public."

Mr. Umar added that CBN would charge commercial banks a fine of N4000 for every N1000 and N400 for every N100 dirty and mutilated money deposited into the apex bank for replacement.

"The existence of composed banknotes in the economy falsifies the true value of the currency in circulation, and can also be a venue for fraudulent activities. Consequently, any composed banknotes discovered in the deposit or DMBs shall attract a penalty of 400 percent of the value".

One of the major roles of the CBN is to issue money to Deposit Money Banks (DMBs) through its branches across the country. Commercial banks often return bad money to CBN for destruction and replacement while they receive new notes. This is how the quality of money in circulation is maintained in the country's economy.

The vast amount of bad notes circulating in the country had cost the Central Bank of Nigeria a huge sum of money in recent years. The currency disposal cost CBN billions of Naira between 2016 to 2020, according to a report by the currency disposal unit of the bank.

By rejecting decomposing and dirty currency from DMBs, banks may soon begin to reject bad money from customers which would render most Nigerian money in circulation useless.

The Central Bank of Nigeria has made several changes to the Nigerian financial system in recent months. It recently announced plans to introduce new Naira notes by December 2022, which means that Nigerians would have to replace their current paper notes before the deadline. The apex bank also limited total amount of money Nigerians should deposit into their accounts daily as a means to trace fraudulent transactions.

Since CBN announced the introduction of the new currency, there has been increasing in outdates currency in circulation, some dating back to over ten years ago. It is suspected that most of the money in circulation came from fraud and stolen funds preserved on private shelves.

Meanwhile, the CBN's new directives are expected to help the economy growth; even so, it is yet to stop the rising inflation and Naira's deadly fall against US dollar.

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