Commercial banks deliberately flood market with dirty notes – CBN

The Central Bank of Nigeria (CBN) has blamed commercial banks in the country for the circulation of dirty Naira notes in the country, saying commercial bank receive enough of new notes and have no reason whatsoever to hoard them.

The CBN, through the Acting Director of Corporate Communications, Mr. Isaac Okoroafor said commercial banks are responsible for this because they deliberately flood the system with such notes.

Besides, the situation is becoming messier as several Automated Teller Machines (ATM), and across the counter transactions give out mutilated cash to customers.

Okoroafor who denied any wrongdoing on the side of the apex bank argued that commercial banks are supposed to employ people to do the sorting, the same way CBN has employed people to do it. Instead, they expect the CBN to do the sorting because they are avoiding the cost.

He said “instead of bringing them to us sorted, the banks bring them unsorted. Then we started charging them N12, 000 per box. A box of N1000 notes contains N10million worth. So, a box of N500 notes is N5 million in that order. So, in a bid to avoid cost, they preferred to re-circulate old and mutilated notes.”

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On why so many mutilated Naira notes are still in circulation, CBN claimed that people handle these notes so badly and so within a short while they don’t get to their lifespan anymore and for the lower denomination notes, they have a higher velocity of circulation.

“What that means is that you use it more often and as you use it in exchange, it gets worn out and gets torn more frequently. So, that also creates another problem.”

Recall that the House of Representatives had earlier this year, directed the Central Bank of Nigeria to stop imposing charges on commercial banks before receiving mutilated and dirty notes from them.

The House noted that the surcharge was one of the major reasons why the banks were reluctant to withdraw such notes from circulation or accept them from customers.

Meanwhile reports of massive rejections of mutilated and dirty lower naira denomination notes including N100, N200 and N50 are now rising nationwide on a daily basis.