CBN imposes sanctions on banks over mutilated notes

The Central Bank of Nigeria has expressed concern over the increasing amount of mutilated bank notes deposited with the apex bank by Deposit Money Banks.

To this end, The CBN has warned banks to stop including composed currency notes in their deposit or risk paying a penalty of N400 percent of the value of the bank note.

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

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

The CBN gave the warning in a circular titled, “Treatment of Composed Banknotes”, issued to all deposit money banks on March 31, and signed by its Director , Currency Operations Department, Ahmed Umar.

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

He added that the directive took effect from April 1.

In April 2019, the CBN introduced the Clean Note Policy to put an end to the regime of mutilated naira notes.

Ina  circular containing the policy, the CBN described mutilated notes as a poor quality banknote that requires a special examination to determine their value.

The note could be partially or permanently damaged by fire, water, dye, insects, rodents or destroyed by natural disasters, the apex bank added.

The circular directed banks and cash processing companies making deposits to the apex bank to classify or sort their cash deposits into fit and unfit notes.

According to the circular, failure to do so will attract a penal charge of N12,000 per box, or an amount determined by the CBN.

It, however noted that the CBN and the DMBs would continue to receive mutilated notes from the public.

But with the new directive by the apex bank, it is now unclear if banks will continue to accept mutilated naira notes.