Naira Note: Supreme Court Ruling - Uncertainty As Banks Wait On CBN

There are reportedly divided opinions in the financial sector of the country over re-issuance of the old naira notes following the Supreme Court judgement extending their legal tender status till December 31, 2023. 

 Vanguard reported that while banks said they can't commence re-issuance of the old notes until they are directed to do so by the Central Bank of Nigeria, stakeholders including bank customers, financial analysts and business owners have called for immediate re-issuance of the old naira notes in compliance with the Supreme Court. Some bank executives who spoke to the publication said they would comply once they get a directive from CBN.

 Commenting on the issue, an Access Bank official said; “Banks in Nigeria are heavily regulated, and we only listen to what the CBN says. Despite the ruling, we still need to hear from our regulator. “We all know what the President has said on the matter.

 The CBN takes its orders from the Presidency. I am sure any action by CBN would be a directive from the President." A Keystone Bank official said; “We can’t do anything contrary to CBN.

 They will direct what next and probably from Monday we shall get more updates from our management when they meet on Monday." Another bank official said in spite of the directive, the old notes have not been made available to the bank. 

He said; “We don’t have the old notes and we are not answerable to the Supreme Court. The CBN must send a circular before we can implement any directive.” 

 Another banker who disclosed that the old Naira notes are no longer in their possession, added that if the CBN makes it available to banks they will start paying their customers. However, some financial analysts however called for immediate re-issuance of the old Naira notes in compliance with the Supreme Court judgement.

 Reacting to the judgement, Tajudeen Olayinka, Chief Executive Officer, Wyoming Capital and Partners said; “I think the immediate impacts are: restoration of cash/liquidity to the system; improvement in circular flow; and obliteration of initial objectives of CBN to remove illegal money/money in wrong hands; to remove distortions; and to reduce inflationary pressure.

 “CBN got the whole thing wrong by introducing a policy without good knowledge of policy/system dynamics, and it is sad that it started and ended in ignominy.” 

 Prof Uche Uwaleke, President, Association of Capital Market Academic of Nigeria (ACMAN) also said; “I advise the CBN to comply with the ruling since it has come from the final court in the land. Doing so will help revive economic activities and reduce the current difficulties being experienced by Nigerians on account of the policy. 

 “Be that as it may, it’s important to recognize that the CBN has recorded some achievements in terms of the objectives it set out to achieve. 

The reduction in huge cash circulating outside the commercial banks, the surge in electronic transactions, increase in financial Inclusion are part of the achievements recorded thus far. ” 

The time frame till Dec 31, 2023 provides an opportunity for the CBN to re-assess the policy and improve on its implementation without causing distortions to the economy”.