Month: February 2023

BANKER-CUSTOMER RELATIONSHIP IN NIGERIA: A CASE STUDY OF THE CURRENCY SCARCITY AND ITS LEGAL IMPLICATIONS

By Felix Ayem and Godwin Essah

INTRODUCTION

 On 26^th October 2022, the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele while acting with the approval of the President of the Federal Republic of Nigeria and in line with the provisions of sections 2(b), sections 18 (a), 19(a) and (b) of the CBN Act 2007, announced[1] that with effect from 15^th December 2022, the CBN will be circulating the redesigned naira notes (of the 1000, 500 and 200 naira denominations). The CBN Governor further announced the commencement process of retrieving the old notes of the concerned denominations which according to him, would cease to be legal tender on 31^st January 2023.[2]

However, transition to the new denominations of the redesigned currencies has come with lots of challenges ranging from lack of adequate availability of the new notes and the conundrum created by the already retrieved old notes without the corresponding availability of the new notes. This article therefore admits that the CBN has the legal mandate to undertake an alteration of the money policy in Nigeria under Section 2 of the CBN Act 2007. The article further interrogates the issues surrounding the entire currency redesign while adopting a legal approach in analyzing the relationship between bankers and customers, vis-à-vis the liability associated with the bankers’ failure to honour their customers’ request for funds in their custody. The article would also consider the powers of the CBN to undertake and implement the instant monetary policy and the way forward for Nigeria in the midst of the resultant currency scarcity. This writeup shall make reference to various laws regulating banking practices in Nigeria in doing justice to the discourse.[3]

[1] In line with section 35 of the CBN Act 2007

[2] Tope Fasua, Nigeria’s currency redesign 2023: A case study approach, (February 6, 2023) Available at https://www.premiumtimesng.com/opinion/580328-nigerias-currency-redesign-2023-a-case-study-approach-by-tope-fasua.html Accessed 7th February 2023

[3] Such laws include Banks and other Financial Institutions Act 2004 and the Central Bank of Nigeria Act 2007