If someone sends money in a foreign currency to your naira bank account, some bank automatically converts it and credits you the naira equivalent. Others would request that you create a domiciliary account, and will only convert the money to naira per your approval.
Ultimately, if you frequently receive payment in foreign currency, especially in USD, you should open a domiciliary account. Most Nigerian business people own domiciliary accounts. Many others do not because they consider the procedure to be complex.
One major misconception is that opening a domiciliary account is expensive because it involves foreign currency. Opening a domiciliary account isn’t expensive. In this post, you’ll find answers to the “how much can I use to open a domiciliary account in Nigeria” question. First, let’s look at what a domiciliary account is.
What Is A Domiciliary Bank Account?
Any account type that is operated in a foreign currency is referred to as a domiciliary account or, informally, a “Dom Account.” It’s in every other currency but naira, therefore it may be a current or savings account.
Domiciliary accounts function similarly to your current or savings account in that they make it easy for you to use foreign currencies. You can receive money in foreign currencies directly into your account when you have a dom account.
Anyone in Nigeria, whether they are a resident or not, who has a Bank Verification Number (BVN), can open a domiciliary account with any Nigerian bank. In addition to individuals, businesses and corporations also use dom accounts.
Just like savings and current accounts, there are also different types of savings accounts. Ordinary domiciliary accounts and cash domiciliary accounts are the two main types of domiciliary accounts.
How To Open a Domiciliary Bank Account In Nigeria
Opening a domiciliary account in Nigeria isn’t as complex as you may think. Like every other type of account, you have to visit the bank.
At the bank, request that you want to open a domiciliary account from any staff, preferably a customer care staff. It’s ideal that you already have an account with the bank as it makes the process fairly easier.
You’ll have to fill out, sign, and submit a domiciliary account form. It won’t be very different from the form you submitted when opening your naira account except for a few details.
Furthermore, you have to provide some supporting documents. You’ll give a copy of your government-issued ID, a passport, and a recent utility bill.
The most exclusive requirement for opening a domiciliary account is that you need two references. Your references must have current accounts older than six months. In addition, they must not be salary earners.
The reference requirement is one of the major reasons people back down from opening domiciliary accounts. However, you can ask the bank staff for help and they could recommend you to potential references, people who have current accounts.
How Much Does a Domiciliary Account Cost?
To clear the air, you won’t pay to open a domiciliary account in Nigeria. Instead, you need a minimum account balance to activate your account. The money remains yours and the bank won’t take it.
How much you need as opening balance differs from bank to bank. However, for most banks, the amount is $50 or its equivalent in Pounds or Euros, depending on which currency your domiciliary account is based on. $50 is just around N20,000 (twenty thousand naira).
In other words, you need at least twenty thousand naira to open a domiciliary bank account in Nigeria. Hence, contrary to what many Nigerians think, opening a domiciliary account isn’t expensive.
Even if you don’t have the $50 or its equivalent in Pounds and Euros, you can take N20,000 to the bank and they’ll exchange it.
Can a Domiciliary Account Receive Naira?
The simple answer is No! You can’t receive naira into your domiciliary account. It’s a domiciliary account for a reason, and you have your regular account for receiving naira.
Also, note that your domiciliary account can only maintain one particular foreign currency. For example, if your domiciliary account is a dollar account, you can only receive dollar payments into it. You can’t maintain euros, pounds, or other foreign currencies.
If someone sends euros to your dollar domiciliary account, the bank will credit your account with the dollar equivalent. It’s the same way the bank credits you the naira equivalent when someone sends any foreign currency to your regular account.
With a domiciliary account, you can withdraw foreign currency at the bank. For instance, if you have $100 in your account and decide to withdraw $50, the bank won’t give you N20,000 notes – the naira equivalent of $50. Instead, you’ll get actual dollar notes which you can later exchange.
Do Domiciliary Accounts Have Limits?
Domiciliary accounts usually have no limits on the maximum amount they can hold. However, there are usually transaction limits.
For example, in 2021, banks were to limit the monthly cash deposit on domiciliary accounts to $5,000. Also, there was news of a $10,000 deposit limit in mid-2021.
Before performing any heavy money transaction on your domiciliary account, you should contact your bank to verify if there’s any limit. Bank policies change from time to time.
You only need around twenty thousand – in foreign currency – to open a domiciliary account in Nigeria. You don’t need one million, two million, or even one hundred thousand to open an account.
The most vital requirement when opening a domiciliary account is the references. If you’ve got references, the remaining is light work.