The Central Bank of Nigeria (CBN) on Tuesday banned nine deposit money banks (DMBs) from the foreign exchange market, for hiding over $2 billion belonging to the Nigerian National Petroleum Corporation (NNPC) from the Treasury Single Account (TSA).
THE CITIZEN learnt that the nine banks comprised three tier-one lenders and six tier-two banks.
The President Muhammadu Buhari has been briefed on the breach by the banks, and they have all been mandated to move the monies to the TSA before any consideration for their re-entry into forex trading.
On Monday, the banks came under fire from the apex bank which accused them of engaging in round tripping and threatened punish them for doing so.
In a circular addressed to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers’, signed by its Acting Director, Trade & Exchange, W.D. Gotring, the apex bank accused banks of buying and selling forex without following stipulated guidelines.
“The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004 on the subject,” he said and cautioned the lenders that their action was a breach of extant regulations.
“Against the background, authorised dealers are to note that dealing in foreign exchange without appropriate documentation, which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations”.
He stressed that as provided for in the laws and regulations governing dealings in foreign exchange, authorised dealers shall not sell foreign exchange without appropriate documentation and disclosure to the regulatory authorities, irrespective of the source of the funds.
“Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.
The banks, further findings showed, are engaging in round-tripping, taking advantage of the huge forex gaps between the official and the parallel markets.