The reason the Central Bank of Nigeria (CBN) introduced the clean note policy is to put an end to the circulation of mutilated, defaced, and unfit naira notes.
This information is contained in the Clean Note Policy Document which was recently released by the apex bank, detailing several sanctions to be meted to defaulting banks and the general public.
Section 2 of the CBN Act, 2007 vests the issuance of legal tender currency on the Central Bank of Nigeria (CBN). The task entails design (including security features), production, and distribution of newly printed notes and fit notes as well as replacement of unfit banknotes which are destroyed or older series withdrawn from circulation. Note that the Nigerian Currency Structure comprises of eight banknotes and three coin denominations in circulation, which are: the N1000, N500, N200, N100, N50, N20, N10, and N5 banknotes, as well as N2, N1, and 50k coins.
According to the CBN, the Clean Note Policy aims at ensuring that the banknotes in circulation are of high quality, in order to guarantee public confidence in the naira.
The bankers’ bank noted that a large proportion of the notes currently in circulation in Nigeria are dirty, mutilated, and unfit for ATMs and over-the-counter payments. Over the years, there have been increasing numbers of dirty and unfit currencies in circulation, a situation that has become a source of concern to Nigerians.
The recurring decimal of an increasing amount of dirty and mutilated currencies has also elicited widespread criticism of both commercial banks and the Central Bank of Nigeria. On several occasions, there have been reported cases of dirty and unfit currencies being issued by Deposits Money Banks (DMBs).
Some Nigerians have reportedly described the alarming rate of dirty notes in circulation as embarrassing. According to Duro Olatunji, a trader at the Balogun Market in Lagos Island: “I have observed that in spite of arrest and subsequent prosecution of the culprits, there is still a cartel in the CBN and the commercial banks who make brisk business recycling old naira notes meant for destruction”
While this is going on, both the CBN and deposit money banks (DMBs) have reportedly been trading blames over who is responsible for mutilated currencies in circulation. The CBN has blamed DMBs for deliberately mixing unfit and new notes available in circulation, and re-circulating dirty/unfit currencies instead of sorting out the bad ones and returning them to CBN.
However, the DMBs have also that the claimed that CBN’s delay to credits their accounts with cash deposited by them, couple with huge cash handling/sorting costs by the apex, are some of the major contributory factors to the problem.
Among other statutory obligations of the CBN is to ensure an adequate supply of clean banknotes to facilitate seamless payment and settlement of transactions by the public, Government, and banks.

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