See why CBN instructs banks, IMTOs to pay diaspora remittances in naira

• Nigerian banks have been asked to pay customers who receive money abroad from family and friends in naira
• International Money Transfer Operators have also been given some instructions to convert remittances from abroad to naira
• The move is part of CBN efforts to boost forex supply in the country amid demand pressure in the exchange markets

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Central Bank of Nigeria (CBN) has asked authorised banks and International Money Transfer Operators (IMTOs) to pay all diaspora remittances in naira.

In a circular signed by W. J. Kanya, CBN's Acting Director noted that the instruction is part of its efforts to enhance the foreign exchange market's efficiency and boost remittance flows through formal channels.

CBN has asked banks to pay diaspora remittance in naira Photo credit: Bloomberg/contributor
Source: Getty Images

CBN also noted that these measures will access local currency liquidity to settle diaspora remittances promptly.

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When paying the CBN expects banks and IMTOs to use the prevailing exchange rate.

CBN on diaspora remmitance

The apex bank also stated that eligible IMTO operators can now conduct foreign exchange transactions in the official window, also known as The Nigerian Autonomous Foreign Exchange Market (NAFEM).

The IMTOs can participate in the window directly or through their authorised Dealer Banks (ADBs). As authorised in its circular, it also outlined several guidelines IMTOs must comply with.

Same-Day settlement:

The CBN said that transactions executed and confirmed before 12 noon on a trading date will have the option for same-day settlement.

Transaction pricing:

The pricing for transactions executed with the CBN will be based on prevailing NAFEM rates, referenced by an observable and acceptable market benchmark.

Market Operation:

This market segment will operate under the existing arrangement of authorised dealers with Foreign authorised investments participating in primary market securities auctions.

Regulatory Returns:

All participants must submit daily regulatory returns to the CBN containing relevant information on the sources of funds.

Partnership Confirmation:

IMTOs must confirm their partner banks and provide standard settlement instructions to ensure the smooth implementation of this initiative.

CBN stops BDC funding

Earlier, Legit.ng reported that the CBN reportedly stopped funding for Bureau de Change Operators.

The move aims to test the CBN's reform template to minimise quick fixes in the FX market.

The CBN is also reportedly reviewing significant policies to strengthen the implementation or tweak its reforms.

Source: Legit.ng