In continuation of efforts to increase foreign exchange availability and ease difficulties encountered in obtaining funds for some invisible transactions, the Central Bank of Nigeria (CBN) says it will commence sales of foreign exchange on weekly basis to banks classified into merchant banks, small banks, medium banks and big banks.
It also announced a Special Wholesale Intervention Forward not exceeding 60 days under the following conditions.
The invisible transactions sales shall be for Personal Travel Allowance (PTA) and School fees
according to Director, Financial Markets Department of the Bank, Alvan Ikoku though a circular on Tuesday, titled “Guidelines for the Operationalisation of the CBN Policy on PTA and School Fees”, applicants for personal travel allowance (PTA) shall be 18 years and above; holders of Nigerian passports; bank account holders; and that PTA shall only apply to journeys of not less than five hours’ flight time.
Other conditions to be fulfilled include that the flight must originate from Nigeria; sale of PTA shall be for travel to be undertaken not more than 14 days from the day of the purchase of PTA; applicants shall present a current tax clearance certificate; Applicants shall present verifiable BVNs to their bankers; and that applicants shall be entitled to maximum of $4,000 per quarter.
Also in purchasing foreign exchange for school fees, CBN says applications shall be for university education only while remittances shall be made directly to the university’s account.
CBN has pegged maximum school fees payable to $15,000 per semester; applicants must be recognised parent or guardian who must provide bank verification number to their bankers and must present duly completed Form “A”.
In addition, such guardians must provide valid tax clearance certificate of the applicant; admission letter from the university; and an invoice from the university.
All banks are expected to submit a daily return of their sale of foreign exchange for PTA and school fees to the Central Bank of Nigeria.
“The report must reach the Director, Financial Markets Department, on or before 4pm daily in soft and hard copies.
“The report must indicate Applicant name, Amount purchased, Applicable rate (USD/NGN), Purpose of purchase, Beneficiary name and Passport number”, the circular added while warning that “any bank that fails to comply with this circular shall be sanctioned.
In the other circular titled “Special Wholesale Intervention 60 Days Forward”, also signed by Ikoku, CBN announced a special wholesale intervention forward not exceeding 60 days under the condition that “CBN will not apply all the provisions of clause 2.4.3 (SMIS – Wholesale) of the revised guidelines for the operation of the Nigerian Inter-bank Foreign Exchange Market of June 2016.”
Also, amount of offer is US$500 million; authorized dealers shall send their request for sums not exceeding 7.5% of the amount on offer; banks shall not allocate funds for customers LCs that have already benefited from past SMIS that are yet to mature; and no bank shall exceed its Net Trading Position limit
Other conditions under this arrangement include that successful banks account shall be debited immediately after the release of the intervention result at their quoted rates; allowable spread between bid and offer shall be 50 kobo; successful banks shall send their returns to the Director, Financial Markets Department, 24 hours after release of the intervention result. After release of the results, banks shall sell forward to match the forward purchases from the CBN. The forward sale by banks to their customers shall be for mature or past due obligations; and; banks shall be required to open equivalent amount of fresh LCs (confirmed/unconfirmed) for any of their customers and send evidence of such fresh LCs within a week of release of the auction results.
CBN further stipulates that it shall send examiners to the banks immediately after the intervention; all allotments must be trade backed; no multiple bid is allowed; while CBN reserves the right to disqualify any bid that is unreasonable
“We must deny these groups the undue publicity they crave,” the minister said.
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