Deposit Money Banks (DMBs) have reviewed policy on forex allowance sales to students schooling abroad and overseas travelers over lingering dollar scarcity, it was leant at the weekend.
The banks have slashed quarterly dollar disbursements to customers, with limit also cut from $4,000 to $1,500 for Nigerian students schooling abroad.
The move followed ongoing dollar scarcity which has led to less dollar allocations to banks, reduced dollar deposits in banks and difficulty faced by businesses in accessing forex for their operations.
The banks have cut access to dollars for individuals, businesses, even as the foreign-exchange scarcity poses long-term risks to markets and squeezing the life out of the economy.
Many banks have therefore cut the amount of foreign currency customers can spend on payment cards abroad to as los as $20 monthly while many others have reviewed the forex disbursement rules for Nigerian students abroad and overseas travelers.
In an emailed note to customers, titled: Update on Foreign Currency Transactions, Access Bank said it will between now and December 2022, process only one maintenance/ upkeep request yearly per student schooling abroad for a maximum amount of $1,500.
Access Bank said, such service will only apply to customers whose school fees were processed through its bank and will be subject to maintenance/ upkeep not having already been disbursed previously at any time this year.
“Where the original school fees payments were settled through other banks, we will not process the corresponding maintenance/ upkeep requests. Applicants will be advised to contact the bank that originally processed their school fees,” the bank said.
It added that all applications that meet the above criteria will be processed and disbursed within 30 days from the date of approval, confirming that funds are documents are in line with requirements and will remain subject to forex availability.
Also, Personal Travel Allowance/Business Travel Allowance requests, the bank said, will be processed and disbursed subject to forex availability and within 14 days of approval.
“These changes, it said, are designed to make the process simpler and more accessible for our customers,” the bank said.
Likewise, more Nigerian banks have reduced their monthly international spending limit on naira cards.
The banks informed their customers they were reducing the limit from $100 to either $20 or $50 a month.
The United Bank for Africa (UBA) earlier in the year announced $20 as its new limit. “In line with our promise to keep you updated on services, we have reviewed Naira Card limits for international transactions, and this will take effect 1st of March, 2022,” the bank said.
“Remember you can use your UBA Dollar, Pounds or Euro Card for international POS, ATM and web transactions. If you do not have one and would like to subscribe, please visit a branch close to you.”
Also, Zenith Bank informed its customers that it was reducing its international spending limit on its naira cards to $20 and it was suspending international ATMs and point of sales (POS) transactions.
First Bank announced that due to “current market realities on foreign exchange,” it had reduced its spending limit to $50.
More banks followed on Saturday, also citing recent economic realities. Guaranty Trust Bank, Sterling Bank, Union bank said their new limit was also $20 a month.
Wema Bank went a step further and said it will end its cross-border payments with Naira cards .
Speaking on persistent dollar scarcity, CBN Governor, Godwin Emefiele disclosed that Covid pushed the the global financial conditions to tighten as investors withdrew over $120 billion in portfolio flows from emerging and frontier market countries in the first half of 2020.
He explained that while flows began to recover in the early part of 2021, financial flows to emerging markets like Nigeria, are constrained by expected tapering by the Federal Reserve Bank in 2022, which is likely to affect global financial conditions.
Financial market analysts said the impact is that banks are not honoring card payments, many foreign investors are not able to get their money out and manufacturers are unable to import vital raw materials due to dollar scarcity.
Many banks are following a template they used when they went through a similar contraction in 2016, which was to cut customers’ foreign payments and wait for more dollar inflows before raising the limits.
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