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Banks in Nigeria are set to reduce the amount of money which customers abroad can spend using debit cards starting on Monday, as banks attempt to reduce foreign currency settlement risk.
This was revealed by lenders. The quick fall in the price of crude oil which forms bulk of Nigeria’s export has caused dollar scarcity in the country forcing banks to make effort to evade transactions with hard currency.
The local unit of South Africa’s Standard Bank in Nigeria, Standard IBTC Bank has revealed that from Monday, it will reduce to half the original spending limit for offshore card transactions to $500 per month, while withdrawals will be reduced to $100.
Zenith Bank equally said the use of debit cards abroad for cash withdrawals will be temporarily be put on hold and monthly spending limit abroad will be reviewed to $200.
“This review is in response to today’s economic realities,” Zenith said in a notice, advising clients to request prepaid dollar cards.
Other heavyweight lenders — Ecobank and Fidelity Bank — have also lowered withdrawal limits for individuals while abroad.
Though Central Bank of Nigeria (CBN) usually issues such directives, it remains to be seen whether the apex bank masterminded the latest action. The bank is yet to respond to inquiries on the issue.
The CBN is fighting to protect dollar reserves which are reported to have depreciated to 19% from a year ago. Last week it depreciated the currency on the official market causing the naira to drop on the black and over-the-counter spot markets.
According to Reuters, Bankers said it now takes more than six months to settle foreign lines of credit.
Nigeria is yet to restart forex sales to retail currency traders after it barred international travel as part of a containment measure to curtail the spread of the COVID-19 that has killed 778 people and infected more than 36,000.
Source: CGTN Africa
This post was written by Obiajulu Joel Nwolu.
The views expressed here belong to the author and do not necessarily reflect our views and opinions.