Mutilated naira note: Reps ask CBN not to surcharge commercial banks

CBN
Central Bank of Nigeria

THE House of Representatives on Thursday urged the Central Bank of Nigeria (CBN) to immediately remove surcharge levied on commercial banks for the destruction of old mutilated naira notes in the country.

The House also directed that the CBN as a matter of statutory responsibility withdraw old and mutilated notes from circulation and re-issue new ones immediately.

The House equally directed the Committee on Banking and Currency to liaise with the Central Bank of Nigeria (CBN) to harness the modalities for handling, returning and destroying damaged and mutilated notes and report back within eight weeks for further legislative action.

The House resolution followed a motion sponsored by Hon. Sergius Ogun, entitled, “calls for the removal of surcharge by the central bank of Nigeria on mutilated notes.‎”

The lawmaker who cited Section 20 of the Central Bank of Nigeria (CBN) Act of 2007, which provides that “the currency Notes and Coins issued by the Central Bank of Nigeria (CBN) shall be the approved medium of exchange, and as a result, should be accepted for all transactions in Nigeria.”

He also noted that the widespread circulation of dirty, mutilated and worn out Notes contrary to the requirement that they are replaced by Commercial Banks when they are worn out or defaced as long as the Central Bank’s and Treasury’s serial number can still be seen on the Notes.

Ogun said in the past, “such notes were replaced by Commercial Banks, but now, the Banks routinely reject torn, defaced and mutilated Notes which customers bring for deposits.”‎

He further argued that despite the regulatory position of the CBN, it is apparently encouraging the outrageous and appalling practice of the Commercial Banks in rejecting the Notes.

According to him, the continued circulation of worn out, dirty and mutilated Notes calls for concern and also raises the need for close investigation and constant monitoring of the process of destruction of the Notes, adding that continued printing of new currency Notes without destroying mutilated Notes contributes to the inflationary trend in the economy.

“The practice of rejecting mutilated Notes by Banks is as a result of the refusal of the Central Bank to recycle the old and defaced Notes, and it even imposes ludicrous charges on Commercial Banks, which serve as central collection points for CBN to effectively carry out its functions under Section 18 (d) of the CBN Act.

“I think that as the house of the people we should frown at why the naira is rendered useless in the face of other foreign currencies when there’s capacity to recycle old notes,” the lawmaker stated.

The motion scaled through second reading when it was put to vote by the Speaker, Honourable Yakubu Dogara.

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