Banks blame ATM card ban abroad on round-tripping
Oyetunji Abioye
Oyetunji Abioye
Deposit Money Banks in the country are recording
unprecedented foreign exchange bills owing to heavy and frequent use of payment
cards by their customers who travel abroad, it has been learnt.
The development, which has created huge forex debts with the
banks’ international financial partners, has forced many DMBs to stop their
customers from using their Automatic Teller Machine cards abroad, top bank
executives told our correspondent on Sunday.
The top bankers, who spoke on condition of anonymity because
of the sensitive nature of the matter, listed the countries mostly affected by
the measure as China, United Arab Emirates and all African countries.
One of the bankers explained, “We stopped customers from
using their payment cards when they travel abroad because a large number of
them have created settlement problems for us. We have huge bills to pay in
forex because many of the customers who are traders and importers are using
multiple ATM cards to incur heavy forex liability for us in China and Dubai and
some African countries.
“Also, some customers are engaging in round-tripping. They
go to some of these countries, especially neighbouring countries in Africa, and
use their ATM cards to create heavy forex liabilities for us. We just have to
stop it; it is too much,” one of the bankers explained.
Diamond Bank, in a notice to its customers, blamed the
current foreign exchange problems as the reason.
“Due to the current FX market realities, please be informed
that your naira debit card has been restricted from usage in the UAE, China and
African countries. We encourage you to make use of the Diamond USD or Diamond
GBP debit card to transact in any of the above-mentioned countries,” Diamond
Bank said in a notice to its customers.
As a result of the development, economic and financial
experts have advised the CBN to look at the possibility of devaluing the naira
as a way out of the problem.
Renowned economist and Managing Director, Financial Derivatives
Limited, Mr. Bismarck Rewane, said, “The move by the banks are obvious signs of
rationing and restriction by the CBN. I am not surprised. The solution is to
let the exchange rate change.
“How long can we hold it? The forex is not there; so, the
only thing is to allow the exchange rate to go. I think a combination of
devaluation of the naira and some restriction will save us from the situation.”
The Head, Investment and Research, Afrinvest West Africa,
Mr. Ayodeji Ebo, said the forex scarcity was caused by the administrative
controls and restrictions by the CBN.
He said, “This measure and others will only compound our
problem. The CBN needs to know that we don’t have sufficient reserves to keep
holding the currency; the way out is to allow the naira to flow in order to
reduce the dollar scarcity. If you devalue the naira, the scarcity will
reduce.”
On his part, the Managing Director, Economics Associates,
Dr. Ayo Teriba, said the move by the banks would weaken confidence of wealth
holders, and advised the fiscal and monetary authorities to come up with plans
to address the problem.
He said, “This is not a positive signal for us who are
trying to attract and retain savings. If people are trapped overseas because
they can’t use their cards, they will think twice in the future whether they
should keep their money in Nigerian banks or outside the country.
“This is because when the rule of the game changes suddenly
like this and people become stranded, they will think twice.”
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