Henceforth, any composed banknotes deposited with the CBN by banks in Nigeria would attract 400% worth of penalty of the value deposited. Composed banknotes are basically mutilated naira notes that are glued together and used for transactions.The CBN said circulation of such banknotes is bad for the Nigerian economy.
The Central Bank of Nigeria (CBN) has announced a drastic measure aimed at tackling the increased circulation of composed (mutilated) bank notes in the country’s economy.
In a circular seen by Business Insider Africa, the apex bank warned deposit money banks (DMBs) that going forward, any composed banknotes discovered in their deposits with the CBN, would attract 400% worth of penalty of the value deposited.
The warning followed the CBN’s observation of the ugly trend, which it described as ‘concerning’. The warning is expected to spur the deposit money banks to immediately discourage the circulation or such notes, or risk attracting penalties.
According to the CBN, the circulation of composed banknotes is harmful to the Nigerian economy, in that it falsifies the true value of the naira and aids crime.
“The management of the Central Bank of Nigeria (CBN) observed with concern the increase 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 falsify the true value of currency in circulation, and can also be avenue for fraudulent activities,” said a part of the circular.
Note that the apex bank defines composed banknotes as any naira note that has several parts of a different banknotes of the same denomination, all bound together with the use of glue or seal tape.
Due to their mutilated nature, composed banknotes usually require special examination to determine their true value during transactions. Such poor quality notes could also be easily damaged while being handled during transactions.
Naira notes that are damaged or composed are supposed to be sorted differently and classified as unfit for circulation before being deposited separately with the CBN.
