Two Nigerian banks Stanbic IBTC and Zenith Bank are planning to reduce the amount their customers can spend abroad using debit cards. The banks have come out to say that the move is pertinent as banks are trying to limit foreign currency settlement risk.
Nigeria is currently facing dollar shortages due to a staggering drop in the inflow of dollars owing largely to a drop in oil prices and the slow economy due to the impact of the Coronavirus pandemic.
Stanbic IBTC on its part said it will limit spending for offshore card transactions to $500 per month from Monday (July 20, 2020) and will limit cash withdrawals to $100.
Another top tier lender Zenith Bank said it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200.
Zenith advised clients to request for prepaid dollar cards. The bank in a notice said, “This review is in response to today’s economic realities.
Zenith and Stanbic IBTC are not the only banks initiating these card limitations, Ecobank and Fidelity Bank have also lowered withdrawal limits for individuals while abroad.
Moves like these are usually incited by the Nigerian apex bank-Central Bank of Nigeria (CBN), however, it is not clear if the regulator was behind the latest move.
The bank is battling to conserve dollar reserves that are down 19% from a year ago. Last week it depreciated the currency on the official market prompting the naira to weaken on the black and over-the-counter spot markets.
Bankers told Reuters that it now takes more than six months to settle foreign lines of credit.
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