CBN Issues New Directive On Forex, Letters Of Credit
...Introduces Product Price Verification Mechanism To Forestall Overstall
The Central Bank of Nigeria has directed all foreign exchange (forex) authorised dealers to henceforth only open Forms M for letters of credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service.
This new directive was communicated on Monday to the dealers via a circular TED/FEM/FPC/GEN/01/005 signed by the Director of Trade and Exchange Department of the CBN, Dr. O.S. Nnaji.
The CBN stated that the decision is aimed at ensuring prudent use of forex resources.
The apex bank further said that the new policy will eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumers.
The bank added, “Authorised Dealers are hereby directed to desist from opening of Forms M whose payment are routed through a buying company/agent or any other third parties.
“Additionally, in line with best practices around the world, the CBN will immediately be introducing a Product Price Verification Mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.
“Authorized Dealers will now use this mechanism to verify quoted prices before Forms M are approved.”