New FX scheme: Banks to open domiciliary accounts for participants
The Central Bank of Nigeria, CBN, has directed Commercial, Merchant, and Non-Interest Banks (CMNIBs) to, among other things, open domiciliary accounts for participants in its new guidelines on foreign currency disclosure, deposit, repatriation and investment scheme, 2024.
A statement from CBN yesterday, the apex bank said: “CMNIBs shall open domiciliary accounts designated for the purpose of the Scheme for intending participants; receive and process applications from intending participants in the Scheme in accordance with the Scheme Guidelines; accept deposits of disclosed Internationally Tradable Foreign Currencies (ITFCs) from participants, either directly or from a legal person nominated by the participant.”
The guidelines were modified on October 25, 2024, and issued by the Minister of Finance and Coordinating Minister of the Economy.
The regulator added: “Sequel to these regulations, the CBN or Bank hereby issues the Guidelines on Implementation of the Foreign Currency Disclosure, Deposit, Repatriation and Investment Scheme to CMNIBs.
“This Guideline clarifies regulatory expectations from CMNIBs on their participation in the Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme, 2024 (the Scheme).”
On deposit and repatriation of ITFC, the Guidelines stated: “When a CMNIB confirms that an applicant has complied with the requirements of Section 3.1 of this Guidelines, the CMNIB shall receive the ITFCs into the designated domiciliary account; and forward a report to the Bank in conformity with the approved template.”
On withdrawals from designated domiciliary account and termination of investment it stated: “Except as otherwise provided in the Scheme Guidelines, the CMNIBs shall not impose any restriction on the withdrawal from the designated domiciliary account of the participant; termination of any investment made in a permissible investment instrument or permissible investment sector with any such ITFC.”
On conversion of deposited ITFC, the guidelines noted that a CMNIB shall permit a participant to, at any time, exchange part or the whole ITFC in the participant’s designated domiciliary account for Naira at the prevailing exchange rate, provided that such conversions are properly disclosed and reported in the CMNIB’s foreign exchange returns.
It added: “CMNIBs may trade with any deposited ITFC not immediately invested by a participant, provided that the funds would be made available to the participant when needed. Interest on uninvested Funds Interest payment by CMNIBs on the balance in the designated domiciliary account shall be in line with relevant provisions of the Guide to Charges by Banks and Other Financial Institutions in Nigeria.”
