March 26, 2023
Banks in shock as rejection of old N500 & N1000 spreads

Banks in shock as rejection of old N500 & N1000 spreads

Say President, CBN must speak •Banks implement cash withdrawal limits

The excitement around the Supreme Court’s ruling that the old N500 and N1,000 notes should continue to be used until December 31, 2023 has subsided as broad opposition to the old notes among bank clients, carriers, and other businesses has taken over the financial and economic landscape.

The Central Bank of Nigeria, CBN, and the Federal Government have remained silent over the court’s ruling, which has led to the rejection of the old notes.

Banks have begun implementing weekly cash withdrawal caps for individual clients of N100,000.


The money is given out, nevertheless, in outdated banknotes that the majority of clients declined to accept.

Customers are demanding a formal declaration certifying the old N500 and N1,000 notes as legal cash before they will take them, a top bank official claims.

Under the condition of anonymity, the branch manager of a Tier 1 bank stated: “Everyone (clients) that came to my branch today refused it” (old N500, N1,000 notes). I attempted it even though they claimed no one was collecting it. I offered a person a note for N1,000 to go to a well-known restaurant in Lagos and get me rice, but the eatery refused it. To see if transporters would accept N500, I offered it to someone else to use to board a commercial bus. The gentleman returned and claimed that commercial buses had declined to pick it up as well.

“When it came to the previous N200 notes, the President made a statement, and everyone followed it. So why are they silent right now? Customers advised President Muhammadu Buhari or the governor of the Central Bank of Nigeria to approve the Supreme Court decision.

Sadly, it is what they are even bringing here for us. More notes, including the N1,000 and N500, are even coming, they announced at our meeting.

The beginning of the cash withdrawal limit was also confirmed by the banker.

In a circular sent to our bank, they instruct us to be paying customer N20,000 per customer per day which capped at N100,000 per week.

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Dr. AbdulMumin Issa, acting director of the CBN’s corporate communication department, responded when asked about the aforementioned development, “There is no official announcement on the old N500 and N1,000 notes.”

The trend in Lagos is also noticed in Ibadan, Oyo State capital yesterday, where bank customers indicated they would not take the old banknotes from their banks as the banks had earlier on Monday claimed that they were waiting for CBN or the President before they can issue the old banknotes.

They questioned why the banks were suddenly dispersing it without the two agencies’ announcements.

The CBN sent back the old Naira banknotes it had previously deposited at the apex bank on Monday, a staff member of one of the tier-one banks informed Vanguard. As a result, the staff member’s bank began issuing the old banknotes.

She made it known that she had also withdrawn N30,000 for personal use but regretted that she was unable to utilize it for transactions since dealers and business motorcycle riders refused to accept it.

“I withdrew N30,000 in old notes as well, but when I tried to pay an okada rider, he refused it, I was left stuck. I had to call someone who had N 500 forms because that was the only money I had on me and because there weren’t many new naira notes to settle the bikeman.

Although the CBN has not issued an official declaration regarding the acceptability of the old naira notes, she claimed that with the Supreme Court’s ruling, there is hope that things will improve in the coming days.

Expert opinion

Tajudeen Olayinka, CEO of Wyoming Capital and Partners, commented on the cash shortage by saying: “Cash scarcity might have been avoided or lessened if the withdrawal restriction established by CBN was reached by banks and CBN between January and February 2023 when the old notes ceased to be legal tender.

The situation was made worse by the CBN’s failure to issue enough new banknotes to replace the old ones and its inability to offer a close substitute for cash in the event that it was unavailable.

Usage of an ATM or a point-of-sale device is not a substitute for near-cash.

“It’s a good development and would bring relief over the cash crisis, but much better if CBN can issue the old notes with it,” said Mallam, Garba Kurfi, Chief Executive Officer, APT Securities & Funds Limited, in response to the Court judgment and the banks’ compliance. Also, the FG should issue a proclamation to ensure that it is generally recognized as legal cash because not many people are using it in transactions.

It’s a positive development, according to Prof. Uche Uwaleke, President of the Association of Capital Market Academic of Nigeria, or ACMAN.

The CBN presents itself as a law-abiding institution by ordering banks to accept the N500 and N1000 notes in accordance with the Supreme Court’s ruling. It would also assist in removing any doubt or ambiguity regarding the legitimacy of those old naira bills. The CBN has not indicated that it will recirculate around N2 trillion of old currency already swept up, which explains why it has retained the cash withdrawal cap, therefore the cash constraint may last for some time. The best course of action, in my opinion, is to make sure that banks have enough lower-denomination old and new notes on hand to dispense over the counter and load into ATMs.

In response, Mr. David Adonri, Vice Chairman of Highcap Securities, remarked that it is appropriate to reinstate the old notes in order to alleviate the current painful cash shortage since the CBN has not been able to produce and issue new currency notes to replace the withdrawn ones.

“Hopefully, the old notes will be gradually withdrawn as more new notes enter circulation,” he said. The economy would not have undergone the kind of disruption it is currently going through if CBN had effectively implemented the policy by supplying the equivalent quantity of new notes to replace the removed old notes.

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