Days after the Supreme Court nullified the naira reform policy of the Central Bank of Nigeria (CBN), many banks are left in confusion on how to respond to the ruling as both the regulatory bank and the federal government are yet to issue directives on the way forward.
The Supreme Court had ruled on Friday that the old N500 and N100 notes should remain legal tender until December 31, and cancelled the cash withdrawal limit imposed by the CBN on bank customers. The Supreme Court ruled that though the President had the authority to act as the federation’s executive, he was still required to give the federating units adequate notice before implementing the new monetary policy through the CBN.
The court said that before the old naira notes were withdrawn, the states had not received reasonable notice as required by Section 20(3) of the CBN Act. As a result, the Supreme Court ruled in its lead decision, read by Emmanuel Agim, that Buhari’s authorization for the CBN to withdraw the old banknotes was illegal.
Over the weekend, many Nigerians were still going to bank Automated Teller Machines (ATMs) in search of cash, as the cash crunch in the economy persisted. In Lagos, those who are still in possession of the old naira notes are not able to spend them as merchants and retailers continue to reject the old N500 and N1,000 notes. Since the CBN has yet to act on the ruling, banks may not load their ATMs with nor dispense the old naira note over the counters.
However, industry observers said banks would not implement the Supreme Court ruling until they received instructions and directives from the CBN. As of the time of this publication, the CBN is yet to issue the require circular to the commercial lender on how to go about redistributing the old naira notes back to the system.
In a survey conducted by the News Agency of Nigeria (NAN) in the Federal Capital Territory (FCT), a taxi driver, Abubakar Umar, said he was hopeful that President Buhari or the CBN Governor, Godwin Emefiele, would speak within the week on whether or not they should go ahead and accept the old notes. He said until such a directive was given, he would insist that customers pay him only with new N500 or N1,000 notes.
A petty trader, simply identified as Madam Uloma, also told NAN that she won’t accept the old notes, saying “until I hear from the horse’s mouth, I will not collect the old notes.” Uloma said she would not want to go through the stress she went through when the notes were declared invalid by CBN.
A resident, Fred Oyibo, said he was excited when the Supreme Court’s pronouncement validating the use of old notes was made. He, however, expressed disappointment that he could not use the old notes he had, adding that business operators are still rejecting them in spite of the ruling.
“I have about N3,000 of the old N1,000 notes with me, and I felt elated when the court gave the ruling, but to my dismay, the money was rejected when I went out to buy a few items.
“I tried informing them that the ban had been lifted by the Supreme Court, and they asked if the CBN had spoken. I further tried to educate them that once the Supreme Court gives a ruling, everyone is bound by it, but they insisted on hearing from the Presidency before taking any action.
“At that point, I got discouraged and went back home, and as I speak with you, I still have the money with me,” he said.
