Cashless Policy: Reactions as CBN issues ‘maximum cash withdrawal’ directive to banks, OFIs

*The Central Bank of Nigeria directs all Deposit Money Banks and OFIs to comply with ‘maximum cash withdrawal over the counter by individuals and corporate organisations per week’ as N100,000 and N500,000 respectively

*AMMBAN, BCAN, Micro Entrepreneurs offer diverse reactions on new cash withdrawal policy

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has issued a directive on limited cash withdrawals from over-the-counter, Automated Teller Machines (ATMs) to N100, 000 and N500, 000 per week for individuals and corporate organisations, respectively.

ConsumerConnect reports the country’s Bankers’ Bank disclosed this development Tuesday, December 6, 2022, in a circular to all the Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs).

Consumers at a bank’s ATM gallery in Nigeria

Mr. Haruna Mustafa, Director of Banking Supervision Department at CBN, in the notice to the DMBs and OFIs, stated that daily withdrawal from Automated Teller Machines (ATMs) will now be N20,000 subject to N100,000 per week.

The CBN also directed banks and OFIs to load only N200 and lower denominations into their ATMs in line with the directive.

Consumers and stakeholders’ differing reactions

In reactions to the latest development, however, this directive seems unacceptable to most Mobile Money Operators as well as the organised banks’ customers.

It was learnt some have threatened to take steps to express their opposition to the new CBN regulations.

“Further to the launch of the redesigned Naira notes by President Muhammadu Buhari on Wednesday, November 23, 2022, and in line with the cashless policy of CBN, all deposit money banks and other financial institutions are hereby directed to note and comply with the following: the maximum cash withdrawal over the counter by individuals and corporate organisations per week shall henceforth be N100,000 and N500,000 respectively.

“Withdrawals above these limits shall attract processing fees of 5.0 percent and 10 percent, respectively; third-party cheques above N50,000 shall not be eligible for payment over the counter, while extant limits of N10 million on clearing cheques still subsist; the maximum cash withdrawal per week via Automated Teller Machine shall be N100,000 subject to a maximum of N20,000 cash withdrawal per day,” stated the CBN circular.

Mustafa also said: “Only denominations of N200 and below shall be loaded into the ATMs; the maximum cash withdrawal via the point of sales terminals shall be N20,000 daily.

“In compelling circumstances, not exceeding once a month, where cash withdrawals above the prescribed limits are required for legitimate purposes, such cash withdrawals shall not exceed N5 million and N10 million for individuals and corporate organisations, respectively, and shall be subject to the referenced processing fees in (1) above, in addition to enhanced due diligence and further information requirements.

“Further to (6) above, you are required to obtain the following information at the minimum and upload same on the CBN portal created for the purpose.”

Central Bank warns commercial banks against e-devices rejecting cards

In a related development, the Central Bank of Nigeria in s separate circular signed by Mr. Musa Jimoh, Director of Payments Systems Management Department, cautioned commercial banks and acquirers to desist from the practice of deploying devices that discriminate between payment cards during banking transactions.

A PoS terminal and a smartphone

The West African country’s banking regulator as well stated that the practice is against the provisions of the Guidelines on operations of Electronic Payment Channels in Nigeria (June 2020).

The Bank said: “CBN has observed that a number of the acceptance devices deployed by banks discriminate between payment cards.

“For the avoidance of doubt, all certified payment acceptance devices deployed in Nigeria are required to accept all transactions arising from any card issued by any Nigerian bank.”

Jimoh also stated: “This circular serves as a reminder of the following provisions of the Guidelines on Operations of Electronic Payment Channels in Nigeria (June 2020): Section

“This serves as a notice to all banks and acquirers to desist from the practice of discrimination, as observed breaches will attract appropriate regulatory sanctions.”

AMMBAN opposes regulatory policy on cash withdrawal limits

In reaction to the latest directives by the CBN, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) has kicked against the Bank’s cash-dispensing policy.

The Association stated that the directive would not work, as it protested that it would dampen business for mobile banking agents in the economy.

Mr. Olojo Victor, President of AMMBAN, told Vanguard that “they (regulatory authorities) want to send us out of business. We are against this. It is counter-productive.

“It does not represent what the CBN initially stood for in terms of financial inclusion. This is not driving us forward.”

Olojo argued that “it is a punishment for an average Nigerian. A bag of rice is N48,000. That means if I want to go to the market, I can’t take cash. How will I do the transaction?

“We don’t have the technological infrastructure to support this policy. Nigerians have not been sensitised.

“There is no alternative and you are taking out cash. You are running a cash-dominant economy as we speak.”

The President of AMMBAN remarked: “Cash still remains king whether we like it or not. Go to the average market we still have more cash transactions than PoS and suddenly you want to seal cash without bringing alternatives and education and sensitising Nigerians on how the alternatives work.

“This will not fly. It is not suitable. It is a good idea but not at the right time.”

Directive good but implementation difficult, says BCAN

In regard to the CBN’s cash withdrawal limit, Dr. Uju Ogubunka, President of Bank Customers Association of Nigeria (BCAN), commended the CBN on the policy.

Ogubunka, however, was quoted to have said that such a policy cannot function in a country where most of the citizens are market women, who cannot make use of electronic payment channels.

He stated: “What they are telling us is that we should use online banking more than we use cash.

“They are not stopping us from using the money in our accounts.

“What they are saying is that we should focus more on using electronic payments to do more of the transactions.”

The President of BCAN said: “But given the level of our people and even the use of mobile applications for banking transactions, it might be a big challenge.”

According to him, the banking sector does not have adequate infrastructure in place to back up the CBN’s policy, and that such a policy will dampen business this festive season.

He further warned against the possibility of rise in fraud through electronic payment channels and increase in failed bank transactions.

“This policy will result in reduced business patronage especially for those who may not be able to use mobile banking applications. “Because of I have to buy things using cash and the cash is not available and there is nothing I can do about it, it will restrict me from buying or buy on credit, that is if you have sellers who will be magnanimous to do that for you these days.

“It is certainly going to dampen cash-related businesses,” stated the BCAN Chief.

Dr. Ogubunka noted: “Until we are able to get the infrastructure that will be able to give us seamless transactions and things like that.

“Right now, the infrastructure we have is not as much as one would expect and that is why customers complain of failed transactions and all of that.

“Also, many people have been complaining about failed transactions for instance when they do transfers and make payments online they end up saying those transactions didn’t get to the beneficiaries.

“I know these things because I have been to the banks myself to ask questions and customers als complained to the association.

“Quite a number of fraud, uncertainties, lack of trust we still have a lot of that in the system.”

He added: “If we have real infrastructure for these things, we won’t have problems.

“Until that is done, what the policy is telling us is that we cannot do business beyond that level in a week.”

CBN has not consulted enough –Entrepreneurs

Speaking on the directive, Prince Saviour Iche, President of the Association of Micro Entrepreneurs of Nigeria (AMEN), has expressed reservations on the new cash policy.

Iche, nonetheless, stated that what the CBN is trying to do is to make Nigerian consumers to adopt the cashless policy.

He said: ‘‘The problem we are having is that most of these policymakers do not consult the stakeholders in most of their policies.

“They don’t. The problem of this country is the wrong policies.

‘‘If the CBN governor has engaged the civil society group and the businessmen and women I believe that we would have been able to put heads together.

“For instance, a business friend of mine was telling me last week that he doesn’t do transfer, he believes in going to the bank to do all his transactions because he is afraid of losing his money. “He is not an illiterate but a business person, who is trying to be careful.”

He asked rhetorically: “So, what happens to people, who do daily business?

“What CBN doesn’t understand is that people would be afraid to take their money to the bank, they would rather stock it at home to run their businesses.

“I believe the policy is for only withdrawals, but, if it is for transfer too or deposits, then there would be serious problems.

“Some market women who engage on daily business and carry cash around, they go to bank almost daily to safeguard their money, what happens.”

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