(Adds quote, detail, comments from lenders)
By Oludare Mayowa
LAGOS, July 20 (Reuters) - A Nigerian court has ordered seven local banks to transfer a combined $793 million to the government immediately, and a government lawyer said on Thursday the lenders had withheld money collected on behalf of the state.
Commercial banks in Nigeria collect grants, taxes, fees and tariffs on behalf of the government which they send to a single treasury account with the central bank in line with a policy introduced in 2015 aimed at curbing corruption.
Most of the funds lenders collect on behalf of the government are in hard currency which they sometimes withhold for their own operations.
Severe dollar shortages have been a hallmark of Nigeria's recession, now in its second year. The downturn was brought on by lower prices for oil, the government's main source of income, mostly paid for in hard cash.
President Muhammadu Buhari ordered the merger of state accounts into a single treasury account at the central bank in 2015 to reduce graft and a practice whereby the government would borrow back its own funds from lenders, paying interest to them.
"The court sitting in Lagos granted an interim order, pending when the banks show cause why the monies should not be (remitted) to the government," the government lawyer told Reuters by phone.
The banks must transfer the money to the government, and on Aug. 8 the lenders will have to appear in court to explain why they had withheld the funds, the lawyer said.
The government initiated the case at the federal high court in Lagos, the lawyer said.
The banks affected are United Bank for Africa (UBA) , Diamond Bank, Skye Bank, First Bank, Fidelity Bank, Keystone Bank and Sterling Bank.
According to the lawyer, UBA was estimated to have withheld $367.4 million due to three government agencies, Diamond Bank held back $277.9 million and Skye Bank kept back $41 million. First Bank owes the government $18.9 million, Fidelity Bank $24.5 million and Sterling Bank $46.5 million.
A UBA spokesman said it has remitted all funds due to the government, while Fidelity said it did not owe the government $24.5 million but has contacted the government's accountant to clarify which account the government is referring to.
Other lenders could not be reached immediately for comment. (Additional reporting by Chijioke Ohuocha; Editing by Alison Williams and Hugh Lawson)