CBN bars erring banks from SME Wholesale Forex window

Following persistent complaints that some deposit money banks (DMBs) have deliberately frustrated efforts by many small and medium enterprises (SMEs) to access forex from the new window created by the Central Bank of Nigeria (CBN), the apex Bank on Tuesday, May 2, 2017, barred all but eight banks from participating in the weekly SME wholesale spot and forward intervention with effect from Tuesday, May 2, 2017.

Sources at the CBN disclosed that 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.

According to the source, the CBN frowned at the action of banks that declined to sell foreign exchange to SMEs to enable them import eligible finished and semi-finished items despite the availability of forex from the CBN Wholesale intervention window.

Confirming the decision, the CBN Acting Director, Corporate Communications, Isaac Okorafor, said the CBN management decided to bar banks that were yet to utilize any portion of the funds allocated by the CBN under the SME window, since the inception of the window last month, from participating in the weekly wholesale spot and forward interventions.

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He listed the banks not barred to include: Access Bank Plc, Diamond Bank Plc, Fidelity Bank, Heritage Bank, Jaiz Bank, Sterling Bank, Unity Bank and Zenith Bank, warning 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, disclosed that the action will be lifted immediately any of the affected banks show evidence of significant utilization of the fund allocated to them under the SME window.

As an incentive, Okorafor said banks that had utilized their SME funds were allocated all of the $100 million sold at the Tuesday’s wholesale auction.

He, therefore, urged all stakeholders to play by the rules for the benefit of the entire country and its economy.

Meanwhile, the CBN continued its massive intervention in the foreign exchange segment of the financial market by injecting a total of $196.2 million into the various segments of the Forex market on Tuesday, May 2, 2017.

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According to Okorafor, the apex Bank offered the sum of the $100 million to authorized dealers at Tuesday’s FOREX wholesale auction. A breakdown of the other interventions indicates that the CBN made available the sum of $52 million to the Small and Medium Enterprises (SMEs) segment, while Invisibles such Personal Travel Allowance (PTA), Basic Travel Allowance (BTA), Medicals and tuition received $44.2 million.

Okorafor also announced interventions in the retail auction window, which he said would be computed when the Bank receives requests made by customers to the CBN through their respective banks.

He also disclosed that the Bank will continue its weekly sale of $20,000 to dealers in the Bureau de Change (BDC) segment this week.

The spokesman expressed confidence that the interventions will continue to guarantee stability in the market and ensure availability to individuals and business concerns.