CBN To Fine Banks 400% On Value Of Each Mutilated Naira Note Put In Circulation

Any bank that circulates mutilated notes into the Nigerian economy through the banking system will have to pay a fine of 400 per cent of the value of the currency it put into circulation.

This is based on a circular issued by the CBN to all Deposit Money Banks.

The 400 per cent fine implies that for every N1,000 mutilated naira note put into circulation by a bank will attract N4,000 fine.

The circular titled, ‘Treatment of Composed Banknotes,’ was signed by the CBN’s Director, Currency Operations Department, Ahmed Umar.

In the circular with reference number COD/DIR/INT/CIR/001/006, the CBN warned banks to desist from the practice of circulating composed banknotes which is part of their deposits with the apex bank.

The apex bank in the circular was particularly concerned about the increasing number of these mutilated banknotes, which had made the banking public to always request which the members of banking public for their replacement.

Composed banknotes are mutilated currency notes that comprise of several parts of different banknotes of the same denomination.

The parts of such currency notes are usually put together with the intention of receiving value.

The CBN in the circular said that the existence of such banknotes in the economy falsifies the true value of the currency in circulation and could also be avenue for fraudulent activities.

The circular from the CBN reads, “The management of the CBN observed with concern the increase number of composed banknotes deposited by DMBs and request for replacement of such banknotes by members of the public.

“The existence of composed banknotes in the economy falsify the true value of currency in circulation, and can also be avenue for fraudulent activities.

“Consequently, any composed banknote discovered in the deposit of DMBs shall attract penalty of 400 per cent of the value. This circular takes effect from 1st April 2022.’’

The CBN in 2020 spent the sum of N58.618bn to print 2.518 billion Naira notes, valued at N1.06trn.

The amount indicated a decrease in the bank’s expenditure on currency printing, which stood at N75.52bn, in 2019 and N64.04bn in 2018.

The current management of the CBN under the leadership of Mr. Godwin Emefiele, has been driving the cashless policy with a view to cutting the cost of printing bank notes and cash management, in the country.

The new e-Naira was also initiated in line with the policy.

ENDS