Banks begin issuance of Form ‘M’ directly to importers, suppliers 

In a customer notice titled, “Destination payment for all forms ‘M’, letter of credit and other forms payment”, the bank said that in its bid to ensure that it operates within the laws regulating Banking Operation in Nigeria, it will adhere to the Central Bank of Nigeria, (CBN) directives immediately.

Part of the notice reads: “Please be informed that the Central Bank of Nigeria, CBN, through its Circular referenced TED/FEM/FPC//GEN/01/005 and dated 24th August 2020, has directed all banks to stop the opening of forms ‘M’ whose payment is routed through a buying company/agent or any other third parties.

“The implication of the directive which comes into effect immediately is that banks shall only open form ‘M’ for letter of credit, Bills for collection and other forms of payment in favour of the ultimate supplier of the products or service.”

The apex bank has also concluded plans to introduce a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.

Part of the CBN’s directive reads: “As part of continued efforts by the Central Bank of Nigeria to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumer, authorized dealers are hereby directed to desist from opening 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 be introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.
“All authorized dealers shall use this mechanism to verify quoted prices before forms ‘M’ are approved.”