CBN Threatens Nigerian Banks With 400% Penalty For Circulation Of Mutilated Banknotes

The CBN has expressed concerns over the increasing number of these composed banknotes which the members of the public usually request for their replacement.

The CBN’s Director Umar, in the circular said that the existence of such banknotes in the economy falsifies the true value of the currency in circulation and could also be a venue for fraudulent activities.

In its efforts to end the circulation of bad and mutilated currency, the apex bank has been at the forefront of the fight to end distribution of composed banknotes in the financial system.

Recall that the CBN, in February 2022 said that about 100 tonnes of bad naira notes were generated as waste and destroyed weekly through open-air burning at its 12 disposal centres across the country.

The circular of the CBN indicated that, the apex bank warning, will take effect from April 1, 2022, that violation of this directive by any deposit money bank will attract a penalty of 400% of the value of the banknote on such financial institution.

The circular in part, reads: “The management of the CBN observed with concern the increasing number of composed banknotes deposited by DMBs and request for replacement of such banknotes by members of the public.

“The existence of composed banknotes in the economy falsifies the true value of the currency in circulation, and can also be an avenue for fraudulent activities.

“Consequently, any composed banknote discovered in the deposit of DMBs shall attract a penalty of 400 per cent of the value.

‘’This circular takes effect from 1st April 2022.’’

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