Some Nigerian banks have suspended and reduced the international spending limit for their customers using debit cards abroad. The banks said that this new development is to limit the foreign currency settlement risk, based on current market realities.
However, this is a clog in Nigeria’s financial wheel and a worrying sign of the worsening dollar shortages. The sharp fall in the price of Brent crude, Nigeria’s main export, has made it more severe.
In a nutshell, this new international spending limit means that Nigerian banks are shying away from transactions with hard currency. This is from Reuters.
The two major banks that have intensified their efforts towards the implementation of this new development are Zenith Bank and Stanbic IBTC Bank.
Zenith Bank, one of the tier-1 banks said, there will be a temporary suspension in the use of debit cards abroad for cash withdrawals. Also, there will be a cut in the monthly spending limit of $200 abroad, which is more than half the previous limit. Furthermore, in a notice, advising clients to request prepaid dollar cards Zenith said, “This review is in response to today’s economic realities”.
Also, Stanbic IBTC Bank, a member of the Standard Bank Group, said it will halve the spending limit for offshore card transactions to $500 per month from Monday. There will also be a shortfall of cash withdrawal limit to $100.
The banking industry is battling to conserve the dollar reserves, which is down by 19% for the past year. It will amaze you to know that, last week, the currency depreciated on the official market. This prompted the naira to weaken on the black and over-the-counter (OTC) markets.
According to Reuters, Bankers said it now takes more than six months to settle foreign lines of credit.
Other Banks In The Loop
Zenith Bank Plc and Stanbic IBTC Bank are not the only banks initiating this new development. Other lenders, Ecobank and Fidelity Bank have also been sending circulars to this effect. They are alerting their customers about the lowered withdrawal limits for individuals while in the diaspora.
CBN’s Stand On The New Development
Recall, that Nigeria has made this move before. However, it didn’t turn out well as there was no light at the end of the tunnel, as it was under the jurisdiction of the Apex regulatory bank, CBN.
All means to reach the Apex bank proofed abortive as a response wasn’t forthcoming about their stand on this new development. However, it is not clear if they are the brain behind this action.
What’s your thought on this new development?
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