The House of Representatives has directed the Central Bank of Nigeria to stop imposing charges on commercial banks before receiving mutilated and dirty notes from them.
The House noted in Abuja on Thursday that the surcharge was one of the major reasons why the banks were reluctant to withdraw such notes from circulation or accept them from customers.
The resolution followed a motion moved by a member from Edo State, Mr. Sergious Ose-Ogun.
Members observed that when mutilated notes remained in circulation, they contribute to inflation, describing as strange the growing trend by commercial banks to reject torn naira notes.
Ose-Ogun’s motion read in part, “The House notes that Section 20 of the CBN Act of 2007 provides that the currency notes and coins issued by the CBN shall be the approved medium of exchange, and as a result, should be accepted for all transactions in Nigeria.
“The House also notes the widespread circulation of dirty, mutilated and worn out notes contrary to the requirement that they be replaced by commercial banks when they are worn out or defaced as long as the central bank and treasury’s serial numbers can still be seen on the notes.
“Aware that 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.
“Also aware 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.”
It added, “Concerned that 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, as continued printing of new currency notes without destroying mutilated notes contributes to the inflationary trend in the economy.
“The House observes that the practice of rejecting mutilated notes by banks is as a result of the refusal of the CBN to recycle the old and defaced notes, and it even imposes ludicrous charges on commercial banks, which serve as central collection points for the CBN to effectively carry out its functions under Section 18 (d) of the CBN Act.”
The House, which was presided over by the Speaker, Mr. Yakubu Dogara, also asked its Committee on Banking and Currency to “liaise with the 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 resolution was passes in a unanimous voice vote.