CBN Warns Banks Against Dispensing Old Naira Notes Via ATMs; Vows Sanctions

The Central Bank of Nigeria (CBN) has warned commercial banks to immediately start issuing new naira notes to customers via Automated Teller Machines (ATMs) or face severe sanctions.

Osita Nwanisobi, the CBN's Director of Corporate Communications, issued the warning during an 'awareness and sensitization program' at the Ariaria International Market in Aba, Abia State, with the aim of educating the public about the new naira notes. Addressing the program, he informed that all commercial banks have been instructed not to issue the newly designed notes over the counter.

He further affirmed that commercial banks have been directed to issue the new Naira notes only through ATMs to allow circulation among citizens before the Jan. 31 deadline.

Nwanisiobi also cautioned that old Naira notes of 1000, 500, and 200 would no longer be recognized as legal tender after the deadline ends, thus advising people to deposit them in their respective banks.

The new Naira notes, according to the CBN Director of Corporate Communications, were issued in the aftermath of the crippling economy. Out of the N3.26 trillion in cash that was circulating, approximately N2.7 trillion was outside the banking system, Nwanisobi revealed.

"We have too much cash outside the banking system. There are so many people hoarding the notes and we want this cash to come into the system. People hoard billions of naira in their houses and that's not good for the economy. We want all the cash to be into the system," he said, as per BusinessDay.

Providing additional context for the apex bank's decision, Nwanisobi explained that the CBN Act allows it to replace Naira every eight years. He further said since most of the current currency was almost completely mangled, CBN needed to develop a new note to improve the situation.

He went on to warn traders against misusing new naira notes, affirming that security has been heightened and those found abusing the system will be subject to legal consequences. He also called on traders to alert CBN branches if any commercial bank distributes obsolete notes through ATMs, assuring them that sanctions will be imposed for such actions.

Kofo Salam-Alada, director of the CBN's legal services division, Wednesday disclosed that the central bank is already monitoring banks that are still dispensing outdated naira notes from their ATMs. He claimed a few elements that might affect how widely the new notes are used have already been identified by the CBN. Anyone detected selling the new notes or any other naira denomination would be sentenced to jail time, he added.

"We stopped withdrawal of new notes over the counter to ensure that everyone can have access to it and not one chief who is known to the manager, walks in, and carts away all the new notes in a particular branch. That is why we said it should be in the ATMs which cannot distinguish people," Salam-Alada said, as per Daily Trust.