Post Views: 165 Eighty months after the introduction of the cashless policy initiative in January 2013, and several postponements, the Central Bank of...
Eighty months after the introduction of the cashless policy initiative in January 2013, and several postponements, the Central Bank of Nigeria (CBN), on Tuesday approved charges on bank deposits and withdrawals above the set threshold in six states with commercial cities across the country from Wednesday, September 18, 2019.
A circular by Sam Okojere, CBN’s Director, Payments System Management Department, titled “Re: Implementation of the cashless policy,” the listed the states such as Lagos, Ogun, Kano, Abia, Anambra, and Rivers States, as well as the Federal Capital Territory (FCT), Abuja.
The move which is part of efforts to migrate more people onto electronic payment platforms is expected to drastically reduce the cost of currency management in the country, with withdrawals of over N500,000 for individual accounts attracting 3% processing fees; and 2% for lodgments of similar amounts with effect from.
According to a circular to all deposit money bank (DMBs), which also announced the commencement of the charges on deposits in addition to already existing charges on withdrawals, corporate accounts will, however, attract 5% processing fees for withdrawals and 3% for lodgments of amounts above N3,000,000 from that date.
Nationwide implementation of the cashless policy, the circular noted, will take effect from March 31, 2020.
Recall that in an unprecedented move, the CBN’s April 20, 2017, circular, announced the suspension of charges on cash withdrawals and deposits above the stated threshold announced in its circulars referenced BPS/DIR/GEN/CIR/04/001 of February 21; and BPS/DIR/GEN/CIR/04/002, dated March 16, 2017.
In another circular reference: BPS/DIR/GEN/CIR/04/004, dated April 20, 2017, titled: “Re: Circular on nationwide implementation of the cash-less policy,” signed by Dipo Fatokun, the then director, Banking & Payments System Department, the apex bank directed that “the policy on third party cheques shall remain in force.”
The apex bank while suspending the fee charges “till further notice,” did not, however, give reasons for the decision.
Besides that, the circular directed that the new charges already applied by the banks since April 1, 2017, as contained in the above-named circulars “should be reversed and the old charges as stated in No.3 above should be applied.
“All necessary refunds should be made accordingly,” the CBN further directed.
Before the suspension was announced at the time, implementation of the policy had commenced in the six states hosting the nation’s commercial nerve-centres: Lagos, Ogun, Kano, Abia, Anambra, and Rivers, as well as the Federal Capital Territory (FCT) Abuja.
The CBN had in 2013 explained at different fora in the past that the cashless policy as part of a drastic review of the nation’s payment system is to enhance financial inclusion and “bring at least 50m more Nigerians into the formal banking system in the next eight years.”
The cashless policy whose pilot stage was in Lagos it will be recalled is aimed at drastically reducing the volume of cash in circulation, reduce reliance on cash for transactions, and enhance the nation’s electronic payment system.
As a result of the non-implementation of the policy, currency-in-circulation in Nigeria has remained high, rising by N387.123bn or 23.72% from N1.631tr at the end of December 2012, to N2.018tr by August 2019.
Within the period, the amount soared to an all-time high of N2.329tr in December 2018, representing N697.989tr, or 42.77% growth the 2013 December figure.
The decision to implement the policy may not be unconnected also with the fact that the currency-in-circulation figure has stayed above the N2tr mark since November 2018, when it stood at N2.1tr and continued until it peaked in the following month, before a gradual decline. It fell to its lowest level since November 2018 in July 2019, when it stood at N2.003tr, before rising slightly to N2.018tr at the end of last month.
Meanwhile, in another circular also by Okujere, the CBN, also on Tuesday, announced a downward review of the Merchant Service Charge (MSC) from 0.75% capped at N1,200 to 0.50% capped at N1,000, with effect from Tuesday, September 17, 2019.
This, it noted, is part of efforts to further promote the cash-less economy initiative and enhance the collection of applicable government revenues.
It also approved that banks unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulations.