Central Bank of Nigeria (CBN) has said it will monitor the level of compliance by Deposit Money Banks (DMBs) in accordance with its recently issued circular on the Nigerian cheque standard and added that it will sanction any bank with Magnetic Ink Character Recognition (MICR) reject by November 1. 2023.
Cheque book with a blank cheque
The apex bank also assured that the recently lifted ban on 43 items will ensure that its monetary policy tools will become more effective with the attainment of a unified, well-functioning market for FX, where pricing is based on a willing-buyer and willing-seller system. With this, the CBN’s core functions and mandates become realisable.
The CBN in a circular titled; Circular on the revised Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS): MICR Rejects, noted that its NCS standard tagged version 2.0 was released with the aim of increasing the efficiency and security of the Nigeria Clearing System.
It however stated that MICR rejects have been on the increase wand ordered that in furtherance of the bank’s effort to reduce the number, DMBs must contact their personalisers and reiterate the need to revalidate the MICR code line details for correctness in accordance with the NCS and NICPAS version 2.0.
“Furthermore, both the presenting and receiving banks should also thoroughly examine their in-house cheque processing equipment to ensure that they are properly calibrated and supervised”, the CBN said.
It added that this is to eliminate distortion of image and data being transmitted during cheque truncation process.
It said, “Please note that the bank will monitor compliance with the provision of this circular and any bank with MICR reject starting from 1st November 2023 would be penalised in accordance with the sanctions grid”.
Meanwhile, the bank has expressed belief that its monetary policy tools will become more effective after it lifted the ban on 43 items.
It noted that the willing-buyer and willing-seller system allows the exchange rate to adjust to clear the market and ensure that there is always supply.
According to the bank, the widening premium between the official rate and the parallel market in recent months indicates that the rate has not been setting a clearing price and added that importers of these products rely on the parallel market to source FX for importing these goods.
This, the bank said, puts additional demand pressures on the parallel market, thereby widening the gap with the official rate and permanently segmenting the market.
“Removing these restrictions eliminates the need for importers of these products to go to the parallel market, reducing the pressure on the naira. The hitherto FX restrictions had implications on inflation, causing the prices of affected goods to increase”, the CBN said.
Speaking on how this benefits local production, the bank said, “Local production will benefit from cheaper imported inputs, and consumers will benefit from cheaper retail products. The policy is suitable for a unified FX market and positive as well for inflation. It is expected that employment generation will be boosted as closed factories re-open. Price stability will benefit the economy and the standard of living in general”.