Festus Akpobor

In its bid to ensure that players in the Nigerian financial sector play by the rules, expecially in the Foreign Exchange (FOREX) Market, the Central Bank of Nigeria (CBN) has sanctioned some banks over their activities in the Small and Medium-scale Enterprises window of the FOREX market.

Top on the list of the banks sanctioned by the apex bank recently are First Bank of Nigeria Limited, First City Monument Bank Plc (FCMB), Ecobank Nigeria and 13 other Deposit Money Banks from participating in the Small and Medium-scale Enterprises window of the foreign exchange (FOREX) market.

The decision was taken following series of complaints from customers that the banks were deliberately frustrating the CBN’s bids to provide forex for SMEs from the window.

The SME wholesale window was created by the apex bank last month to allow SMEs have easier to access forex to import critical materials for their operations.

CBN’s Acting Director, Corporate Communications Department, Mr. Isaac Okorafor, said in a statement that the affected banks has accessed over $300m offered to the SMEs’ wholesale forex window since its creation, but refused to sell the forex to small businesses.

“Following persistent complaints that some Deposit Money Banks have deliberately frustrated efforts by many SMEs to access forex from the new window created by the CBN, the apex bank on Tuesday, May 2, 2017, barred all but eight banks from dealing in the SME wholesale forex window,” part of the statement reads.

“The financial regulator took the decision to bar the erring banks based on field reports, which revealed that only eight banks had sold forex to the SMEs segment since the inception of the new window.

“The CBN frowned at the action of banks that declined to sell foreign exchange to the SMEs to enable them to import eligible finished and semi-finished items despite the availability of forex from the CBN wholesale intervention window,” the statement added.

According to the apex bank only eight banks had sold forex to the SMEs segment since the inception of the new window.

The banks include Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Heritage Bank, Jaiz Bank, Sterling Bank, Unity Bank and Zenith Bank Plc.

Consequently only these eight banks would be allowed to access forex in that segment of the financial market henceforth, the statement added.

Meanwhile the others banks affected by the CBN sanction are Citibank, Keystone Bank Limited, Skye Bank, Stanbic IBTC Bank, Union Bank Plc, Wema Bank Plc and others.

The statement added that as an incentive, the banks that had utilised their SME funds were allocated all of the $100m sold at Tuesday (2 May)’s wholesale auction.

Okorafor warned that the CBN would “not sit back and allow any form of instability in the interbank forex market through the actions of institutions or individuals.”

He, however, added that the sanction would be lifted immediately any of the affected banks showed evidence of significant utilisation of the funds allocated to them under the SME window.

The apex bank’s spokesperson urged all stakeholders to play by the rules for the benefit of the entire country and its economy.

In another development, the CBN continued its intervention in the foreign exchange segment of the financial market by injecting a total of $196.2m into the various segments on 2 May.

According to Okorafor, the apex bank offered the sum of the $100m to authorised dealers at the forex wholesale auction.

A breakdown of the other interventions indicate that the CBN made available the sum of $52m to the SME segment, while invisibles such Personal Travel Allowance, Basic Travel Allowance, medicals and tuition received $44.2m.

The CBN reassured that it would continue its weekly sale of $20,000 to dealers in the Bureau de Change segment.