The Central Bank of Nigeria (CBN), has expressed its readiness to sanction banks in the country over the increasing amount of mutilated notes in circulation.
In a circular titled, ‘Treatment of Composed Banknotes’, that was addressed to all Deposit Money Banks (DMBs), CBN warned financial institutions in the country to stop including composed currency notes in their deposits.
According to the apex bank, failure of the financial institutions to comply with this directive will expose them to paying a penalty of 400% of the value of the banknote.
While maintaining that this new directive took effect from Friday, April 1, 2022, CBN explained that the existence of such banknotes in the economy falsifies the true value of the currency in circulation and could also be an avenue for fraudulent activities.
“The management of the CBN observed with concern the increasing number of composed banknotes deposited by DMBs and request for replacement of such banknotes by members of the public.
“The existence of composed banknotes in the economy falsifies the true value of the currency in circulation, and can also be an avenue for fraudulent activities.
“Consequently, any composed banknote discovered in the deposit of DMBs shall attract a penalty of 400% of the value.
‘’This circular takes effect from 1st April 2022,” the circular read partly.
What you should know about mutilated notes
Mutilated notes are paper currency, of which a portion is missing or which is composed of more than two pieces. They are typically brittle, burnt, and charred; Therefore, they can’t withstand normal handling.
BizWatch Nigeria, however, understands that these notes are often put together to exchange values.
Meanwhile, an expert recently advised CBN to intensify its input in Nigeria’s agric value chain to make Naira stronger than its foreign counterparts.
According to Dr. Tope Fashua, the Chief Executive, Global Analytics Company Limited, the agricultural sector has the potential to generate the much-needed funds to make the country’s reserves much stronger.
