Domiciliary accounts: CBN grants banks approval to trade idle FX deposits

Domiciliary accounts: CBN grants banks approval to trade idle FX deposits

The Central Bank of Nigeria (CBN) has authorized commercial, merchant, and non-interest banks in the country to trade with foreign currencies deposited in domiciliary accounts that were not immediately invested under the foreign currency disclosure, deposit, repatriation, and investment scheme.

The scheme is set to begin on November 6, 2024, as outlined in the newly approved guidelines by the CBN.

According to the CBN, the foreign currency deposits invested by banks must be made available to participants upon request. The apex bank further emphasized that participating banks are required to submit monthly returns no later than the 14th of each following month.

The CBN clarified, “CMNIBs may trade with any deposited ITFC not immediately invested by a participant, provided that the funds would be made available to the participant when needed.

“Interest on Uninvested Funds: Interest payment by CMNIBs on the balance in the designated domiciliary account shall be in line with relevant provisions of the Guide to Charges by Banks and Other Financial Institutions in Nigeria.

“RENDITION OF RETURNS: Every CMNIB shall render monthly returns (in line with a template to be advised by the Banking Supervision Department) to the Bank on the operation of the Scheme not later than the 14th day of the following month.”

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Reporting Guidelines under the Scheme
In addition, the CBN has mandated that participating banks submit detailed reports for transparency and oversight. These reports must include the total number of participants enrolled in the scheme, the cumulative value of Investment Funds Transfer Certificates (ITFC) received during the reporting period and for the year, as well as updates on applications and processed transactions.

Banks are also required to disclose all financial transactions conducted under the scheme, specifying the investments made in allowable instruments and sectors. They must also account for any uninvested ITFCs, reporting their total value and any corresponding transactions, such as trades, investments, and loans funded by the uninvested ITFCs.

The CBN stated that it may request additional information for monitoring and evaluation purposes.

The new regulations come shortly after the Federal Government introduced a nine-month window for the Voluntary Currency Disclosure, Depositing, Repatriation, and Investment Scheme under Executive Order No. 15 of 2023. The scheme allows Nigerians to disclose and deposit foreign currency in banks, with incentives such as tax immunity, asset protection, confidentiality, interest on deposits, and flexible repatriation options.

Domiciliary accounts: CBN grants banks approval to trade idle FX deposits