Unlocking Dormant Riches: CBN’s Groundbreaking Move to Unleash Idle FX Deposits in ‘Designated Domicile’ Accounts
The Central Bank of Nigeria (CBN) has authorized commercial, commercial and interest-free banks operating in Nigeria to trade tradable foreign currencies deposited in dormitory accounts created under foreign currency disclosure, deposit, repatriation and investment. Plans that are not invested immediately.
The bank disclosed this in its recently approved guidelines for the implementation of the Foreign Currency Disclosure, Deposit, Repatriation and Investment Scheme, which will be charged from November 6, 2024.
The CBN explained that foreign currency deposits invested by banks must be made available to participants upon request.
The apex bank also noted that approved banks must provide monthly returns under the scheme latest by 14th of the next month.
It said, “CMNIB may transact with deposit ITFCs that are not immediately invested by participants, provided the funds are available to the participants when needed.”
“Payment of interest by CMNIB on interest on uninvested funds and balances in accounts at the nominated address shall comply with the relevant provisions of the Billing Guidelines of Nigerian Banks and Other Financial Institutions.”
“Return of Return a. “All CMNIBs are required to submit monthly returns (as per the template advised by the Department of Banking Supervision) to the Bank in respect of the operation of the Scheme by the 14th of the following month.”
Guidelines for reporting returns under the scheme
The CBN also required all banks participating in the scheme to submit detailed reports to ensure transparency and effective supervision.
- The report must include the total number of participants currently enrolled in the plan as well as the total value of Investment Fund Transfer Certificates (ITFCs) accumulated during the reporting period and for the relevant financial year.
- Banks must also provide up-to-date information on applications received and processed, including any notable trends or issues encountered during the review process, and all financial transactions conducted under the scheme, specifying investments in permitted products and sectors. must be disclosed.
- It warned that uninvested ITFCs must also be accounted for so that the CBN knows the total value of unallocated funds.
Lastly, it was stated that banks are required to submit uninvested ITFC statements filed with CMNIB along with records of transactions such as transactions, investments and loans financed by these uninvested ITFCs.
The CBN noted that it may request additional information to support its monitoring and evaluation efforts.
What you need to know
The new directive from the CBN comes less than a week after the federal government launched a nine-month period for voluntary currency disclosure, deposits, repatriation and investment schemes, known as “disclosure schemes”. Executive Order No. 15 of 2023.
- The scheme provides an opportunity for Nigerians holding foreign currency to bring their foreign assets into the formal financial system by allowing them to release and deposit these funds in banks.
- To encourage participation, the government offers several incentives to Nigerians at home and abroad, including tax exemptions, asset protection, confidentiality, interest on deposits, and flexible funds repatriation options.