Mutilate Naira, go to jail! Nigerians get stern warning

Nigerians may soon bid bye to dirty, torn and mutilated Naira as the Central Bank of Nigeria (CBN) has ordered the withdrawal of the N7.9 trillio

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Nigerians may soon bid bye to dirty, torn and mutilated Naira as the Central Bank of Nigeria (CBN) has ordered the withdrawal of the N7.9 trillion unfit banknotes in circulation,  and  decreed that only clean, crisp Naira notes  should exchange hands henceforth.

This is in line with its mandate of  production and circulation of quality banknotes , which align with with defined standards.

Aside that, the apex bank has also pledged  to sensitise the populace on the basic security features, the dangers of sale and proper handling habits expected  to be accorded the legal tender by the public.

It sternly warns then that   “any abuse of the Naira is criminal offence, punishable under the CBN Act of 2007”.

That is to say, abuse the Naira and go to jail!

The current hard stance is hardly surprising since  the CBN, over the years, has been working assiduously to ensure consistency in the quality of the notes in circulation in terms of appearance and cleanliness.

But unfortunately, this effort was not yielding the desired results as the naira has continued to be subjected to various forms of abuse in the hands of many Nigerians. It is a fact widely known that today, despite not being the national currency, Nigerians accord more respect to the American Dollar than the local currency because, hardly can one find the greenback sprayed at parties, soiled, crumpled, trampled  or written upon as the Naira. The end result of the Naira abuse is that a humongous stash ,N7.9 trillion has been rendered unfit banknotes for seamless payment and settlement of transactions by the public, the government and banks.

According to the apex  bank, a large proportion of the naira notes is dirty, mutilated, unfit for even Automated Teller Machines (ATMs) and over-the-counter payments.

Consequently, CBN in collaboration with key industry stakeholders produced the Clean Notes Policy  and Banknote Fitness Guidelines., which were launched in Lagos last week by its Governor, Godwin Emefiele, and the critical stakeholders.

“The objective of a banknote fitness standard is to ensure that they meet the expectation of the public in terms of cleanliness and appearance; ensure that basic security features on the banknote remain visible and are easily recognized by the public to deter  counterfeiting; and facilitate automated dispensing, counting and sorting of banknotes”, the apex bank states.

It adds: “The document provides acceptable standards for good quality (fit) banknotes and poor quality (unfit) banknotes based on various degradation levels.” The apex bank then threatened banks that violate the two  policy documents with dire consequences.

According to Emefiele, the ‘responsibility for clean notes in circulation is a collaborative effort and  CBN is alive to its own responsibilities of preserving the integrity of the Naira and sustaining public confidence in the currency. These include sustainable institutional reforms and enactment of policies that will promote efficient currency management .

The Clean  Note Policy requires the banks to process their banknotes using registered cash processing companies (CPC) and classify them into fit and unfit.

Emefiele, who was represented by the Deputy Governor in charge of Operations, Mr. Folashodun Shonubi, explained that the ‘responsibility for clean notes in circulation is not exclusively that of the central bank.

“Rather a collaborative effort between the central bank, banknote suppliers, deposit money banks (DMBs), manufacturers of currency management equipment, currency transportation and processing companies, security agencies, and the general public.

“ I congratulate the Currency Operations Department and the Nigerian Cash Management Scheme (NCMS) for their foresight and efforts in producing these two important policy documents that would assist the public and critical stakeholders to  identify banknotes that are fit for circulation and those unfit to be withdrawn from circulation.  It is worth noting that the bank has the responsibility for preserving the integrity of the Naira and sustaining public confidence in the national currency as enshrined in Section 2 of the CBN Act 2007. To attain these objectives, the Bank strives to ensure an optimal supply of clean and quality banknotes in a balanced denominational mix to meet public demand, while also maintaining a balanced currency structure that is both efficient and cost effective”, Emefiele stated.

On what the apex bank is doing to  make clean naira note part of daily life of Nigerians, he said:

“Currency management is vital to our daily lives because despite the improvements in electronic payments system, banknotes remain predominant for payment and settlement of commercial transactions in Nigeria. The bank has registered eight companies to carry out cash-in-transit and two  cash processing companies to operate in Nigeria. Deposit money banks (DMBs) are expected to patronise only these registered companies for CIT and sorting services.

“It is expected, therefore, that more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes.

“The Central Bank of Nigeria, as part of its effort towards devolving the retail cash management to the private sector, has approved the revised guidelines for registration of CIT/CPCs. These guidelines provide for the operation of CITs and CPCs at both national and regional levels. It is hoped that this would encourage unregistered companies to come under the regulatory purview of the Central Bank and ensure a nationwide

coverage of these services

“The bank has also put in place strategies to enable direct disbursement of lower banknotes to various market associations and merchants through their respective Deposit Money Banks (DMBs). The intervention commenced in Abuja and has been extended to Lagos, Kano, Enugu,Umuahia, Yola, Jos, Gombe, Asaba, Ibadan, Kastina, Uyo, Minna and Port Harcourt.

“Furthermore, the bank reduced the processing charges for DMB deposit of lower denomination banknotes (N5 – N50) to encourage the return of unsorted banknotes to CBN for processing.

“The bank also intends to embark on a project that would enable mop-up of the over-circulated and mutilated banknotes from circulation. Furthermore, the bank would continue to embark on sustainable institutional reforms and enact policies that will promote efficient currency management in Nigeria.

“We will continue to sustain our engagement with key stakeholders, to enable us gain insight into the various challenges that end-users face while processing the banknotes. I assure you that all suggestions that will help improve currency management operations would be duly considered. Consequently, the two policy documents would be reviewed periodically under the NCMS, in liaison with key stakeholders.

“I will like to seize this opportunity to urge Nigerians to

handle the Naira banknotes properly; as it is a criminal offence to abuse the Naira. Moreover, the Naira is our identity as a country, so we need to respect it. After this unveiling event, the bank would monitor and sanction any DMB/financial institution that contravenes the provisions of the two policy documents.”

 In her presentation, the Director, Currency Operations, CBN, Mrs. Priscillia Ejeme, said despite the huge volume of CIC and its attendant challenges, the CBN remained committed to ensuring that the nation has fit notes in circulation.

Also alluding to the incentives for banks to bring in bad notes, she said: “We would give a timeframe by which banks would need to bring all mutilated bank notes to us for replacements and we would do it in a way that they would be encouraged to bring them forward.”

She also added that ATMs are expected to have only mint and close to mint dispensed, which the guideline stipulates as Level 1 and Level 2.

She also urged banks to increase sorting of mutilated notes to the CBN to retrieve the cleaner notes.

On sanctions, she said: “There would a penalty for counterfeits from ATMs and it is currently N1 million for counterfeits detected via ATMs or across the counters.”

On his part, the Director, Banking and Payment System Department, Mr. Dipo Fatokun, said: “The clean note policy document provides the uniform standard of only clean and fit bank notes in Nigeria.”

The guidelines state that the document is intended for the use of all cash handlers such as Deposit Money Banks (DMBs); micro finance banks, third party service providers and general public. All cash handlers are expected to comply with the quality standards as set therein to sustain public confidence in the national currency.

Implementation

In line with the provisions of these guidelines, stakeholders should take the following steps to ensure that the banknotes in circulation are of acceptable quality standard:

•The quality of banknotes must be checked in the course of withdrawal by all the major cash handlers.

•The DMBs and third party service providers are advised to adhere strictly to the provisions of the guidelines as any violation would attract appropriate sanctions.

•Fit banknotes should be recirculated to the public, while unfit banknotes are to be returned to CBN for authentication and disposal.

•All banknotes processing machine parameters must be configured in line with the quality criteria set by CBN to ensure consistent quality output.

•Cash handlers (DMBs, Microfinance banks,etc) shall pay only fit banknotes to the pubic.In a situation where the demand for banknotes exceeds the available stock of fit notes, the issue should be escalated to the issuing authority (CBN) for necessary action.

Monitoring

CBN would periodically gauge the effectiveness and compliance with the banknotes fitness guidelines.

The  currency operations department would conduct routine monitoring of cash handlers with a view to determining the adherence of the cash handlers to the specifications of the fitness standards.

•Gauging stakeholders’ deviation from the fitness standards.

•Ensuring that deviations are within the acceptable tolerance.

•Determining the quality of banknotes in circulation by random sampling.

Obtaining feedback and document findings for continuous improvement. CBN shall enforce compliance with the banknotes Fitness Guidelines by all cash handlers. The guidelines aim at ensuring that only fit banknotes are in circulation, while unfit banknotes are withdrawn. Unfit banknotes may be deposited at the branches of DMBs and CBN nationwide.

CBN has the sole responsibility to dispose all unfit banknotes and replace them as appropriate.

The document also defines both clean and unfit Naira notes

Fit banknote

 A banknote that is suitable for continued circulation and is sufficiently clean to allow its authenticity and value to be readily ascertained.

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