With just a couple of weeks before the cashless policy of the Central Bank of Nigeria (CBN) which places a limit on how much cash a bank customer can withdraw over the counter, through Automated Teller Machines (ATMs) and Point of Sale (POS), many customers remain worried on how the policy will affect their daily transactions and businesses.
The CBN had on December 6, 2022, issued a circular to all deposit money banks, microfinance institutions, primary mortgage banks and other financial institutions, directing that the next step of the cashless policy will take effect from Monday, January 9, 2023.
According to the new policy, individual ban customers cannot withdraw more than N20,000 in cash over the counter, through ATMs or POS in a day. This amounts to N100,000 every week or N400,000 in a month. For corporate customers, the withdrawal limit was placed at N100,000 per day amounting to N500,000 per week or N2 million every month.
The circular which was signed by CBN Director, Banking Supervision, Haruna Mustafa, also placed a limit of N50,000 limit on over the counter third party cheques. “Third party cheques above N50,000 shall not be eligible for payment over the counter, while extant limits of N10,000,000 on clearing cheques still subsist.”
CBN governor, Godwin Emefiele had prior to announcing the redesigning of the naira had mentioned plans to ensure that the Nigeran economy goes 100 per cent cashless. In canvassing for the redesigning of the N200, N500 and N1,000 notes he had also mentioned that the higher denominated notes will be used as only a store of value as only more of the lower notes will be in circulation.
To this achieve this, the circular directed that as against N1,000 and N500 notes that are dispensed by ATMs across the country, naira denominations of N200 and below only must be loaded into ATMs. This would mean that N500 and N1,000 notes can only be collected over the counter at the banking halls or at POS points.
Although, some have argued that the new policy would put agency banking agents popularly known as POS points out of business, a banking agent in Lagos, Johnson Okanlawon, who spoke with NATIONAL ECONOMY, said the policy would be more favorable to banking agents.
For those who would want to exceed the limit, the circular had stipulated that withdrawals above these limits will attract processing fees of five per cent for individuals and 10 per cent for corporate organizations. “In compelling circumstances, not exceeding once a month, where cash withdrawals above the prescribed limits is 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 addition to enhanced due diligence and further information requirements.”
To be eligible for the special withdrawals above the stipulated limit, the CBN said individuals and corporate organisation will have to upload on a CBN portal created for the purpose valid means of identification of the payee such as National ID, International Passport, Driver’s License, Bank Verification Number (BVN) of the payee.
Also, to be made available to the CBN will be the notarised customer declaration of the purpose for the cash withdrawal, senior management approval for the withdrawal by the managing director of the drawee, where applicable and approval in writing by the MD/CEO of the bank authorising the withdrawal.
The CBN also directed that banks provide “monthly returns on cash withdrawal transactions above the specified limits should be rendered to the Banking Supervision Department, compliance with extant AML/CFT regulations relating to KYC, ongoing customer due diligence and suspicious transaction reporting etc. is required in all circumstances, customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions,” adding that aiding and abetting the circumvention of this policy will attract severe sanctions.
Commenting on the policy, Tope Fasua, an economist said, “There will be some initial hiccups with businesses such as instances where POS machines do not work and the normal hiccups of trying to process transactions online, downtime, internet issues and all of that.”
For Head of financial institutions ratings at Agusto&Co, Ayokunle Olubunmi, whilst the policy is a good one that will help the economy in the long run, it may create a dislocation in the country’s economy in the short run as people strive to adjust to the new policy. To him the policy will enable the CBN track the flow of funds against what has been happening in the country where its monetary policies do not have control over cash in circulation.
He also noted that the policy in the long run will be good for the credit system as banks will be able to give out loans based on BVN. Asides this, he said it will boost government revenue as small and micro businesses in the informal sector will now be brought into the formal system. Thus allowing the tax authorities to be able track and tax them accordingly.
