The development, which has created huge forex debts with the banks’ international financial partners, has forced many DMBs to stop their customers from using their Automatic Teller Machine cards abroad, top bank executives told our correspondent on Sunday.
The top bankers, who spoke on condition of anonymity because of the sensitive nature of the matter, listed the countries mostly affected by the measure as China, United Arab Emirates and all African countries.
One of the bankers explained, “We stopped customers from using their payment cards when they travel abroad because a large number of them have created settlement problems for us. We have huge bills to pay in forex because many of the customers who are traders and importers are using multiple ATM cards to incur heavy forex liability for us in China and Dubai and some African countries.
“Also, some customers are engaging in round-tripping. They go to some of these countries, especially neighbouring countries in Africa, and use their ATM cards to create heavy forex liabilities for us. We just have to stop it; it is too much,” one of the bankers explained.
Diamond Bank, in a notice to its customers, blamed the current foreign exchange problems as the reason.
“Due to the current FX market realities, please be informed that your naira debit card has been restricted from usage in the UAE, China and African countries. We encourage you to make use of the Diamond USD or Diamond GBP debit card to transact in any of the above-mentioned countries,” Diamond Bank said in a notice to its customers.
As a result of the development, economic and financial experts have advised the CBN to look at the possibility of devaluing the naira as a way out of the problem.
Renowned economist and Managing Director, Financial Derivatives Limited, Mr. Bismarck Rewane, said, “The move by the banks are obvious signs of rationing and restriction by the CBN. I am not surprised. The solution is to let the exchange rate change.
“How long can we hold it? The forex is not there; so, the only thing is to allow the exchange rate to go. I think a combination of devaluation of the naira and some restriction will save us from the situation.”
The Head, Investment and Research, Afrinvest West Africa, Mr. Ayodeji Ebo, said the forex scarcity was caused by the administrative controls and restrictions by the CBN.
He said, “This measure and others will only compound our problem. The CBN needs to know that we don’t have sufficient reserves to keep holding the currency; the way out is to allow the naira to flow in order to reduce the dollar scarcity. If you devalue the naira, the scarcity will reduce.”
On his part, the Managing Director, Economics Associates, Dr. Ayo Teriba, said the move by the banks would weaken confidence of wealth holders, and advised the fiscal and monetary authorities to come up with plans to address the problem.
He said, “This is not a positive signal for us who are trying to attract and retain savings. If people are trapped overseas because they can’t use their cards, they will think twice in the future whether they should keep their money in Nigerian banks or outside the country.
“This is because when the rule of the game changes suddenly like this and people become stranded, they will think twice.”