By Elizabeth Adegbesan
A DOMICILIARY account is a bank account where you can receive or send money in foreign currencies such as the dollar, pounds, euro.
You can open a domiciliary account in any Nigerian bank and operate it while abroad or within the country with your MasterCard or internet banking.
A domiciliary account (Dom account) is operated using a single foreign currency. However, it is possible to have different domiciliary account for different currencies. In other words, you can have a Dom account in dollars, another one in euro and another one in pounds. However, most Dom accounts in Nigeria are dollar based.
A Dom account is operated just like the normal naira denominated current account but in foreign currency. You can save in foreign currencies, collect money over the counter in foreign currencies, and also issue cheques to third parties.
Dom account has transaction limits. These limits are either on daily and monthly basis. Your Dom account should have a minimum operating balance of $20 to $150 (£ or €) be it individual, corporate businesses or Micro Small and Medium Enterprises, MSMEs. The operating balance is based on your banks’ requirement.
There are also fees paid for certain Dom account transactions. These transactions ranges from withdrawals over-the-counter or from Automated Teller Machine, ATM, branch to branch transfer, to bank to other bank transfer. You are also entitled to interest rates when operating a Dom account. These charges and interest rates differ depending on your bank.
Steps to opening a domiciliary account
To operate a domiciliary account you have to:
- 1. Open one at a bank
of your choice in Nigeria. You would be asked by your bank to provide a referee operating a domiciliary bank account.
- 2. If you are receiving
money, the sender has to send the money in the currency in which the account was opened. You cannot receive pounds into a dollar domiciliary account.
- 3. If the money is sent
through a wire transfer, it takes two or more working days for you to receive the money. You can go to the bank and collect money in the currency in which the account was opened with a foreign currency withdrawal slip or you can withdraw the money at the ATM.
- 4. If you want to save
money in your Dom account, you have to first buy the foreign currency and then pay it into the account using a deposit slip.
In Nigeria, it is preferable to fund your domiciliary account in dollar denomination. This is because the dollar is the most used and traded foreign currency in the Nigerian foreign exchange market.
Advantages of domiciliary account
The following are the advantages of using a domiciliary account.
- 1. The domiciliary
account allows you to receive foreign currency directly from the sender.
- 2. You can pay for
international transactions online using your domiciliary account MasterCard.
- 3. It insulates your
money from fluctuations in exchange rate.
Disadvantages of a Domiciliary account
The downsides of a domiciliary account are as follow:
1.You are restricted
to one type of currency per account. For instance, when you want to transact in Euro, you have to open Euro domiciliary account and so on.
- 2. It is difficult to get
referees as most people use international money transfer channels to send and receive money.
- 3. The charges on
transactions are high depending on your bank. You need to have a good reason or be dealing in the large sums of money in foreign currency so that it is really worth it to operate a domiciliary account.