CBN Imposes 10% Penalty On Bank Withdrawals Above N40m

Apparently worried by the seemingly high level of currency-in-circulation (outside of the nation’s banking system), the Central Bank of Nigeria (CBN), on Thursday, announced the reintroduction of charges for withdrawals by bank customers above the tolerable limit.
The reintroduction, according to the CBN circular signed by Dip Fatokun, its director of Banking & Payment System Department, was decided at the February 8, 2017, meeting of the Bankers Committee, comprising the CBN management and chief executives of banks and related institutions.
According to the breakdown, while corporate cash withdrawals and deposit of less than N3m would be free of charge, deposit above N40m in Lagos will from April 1, attract 5% charge, withdrawal would cost 10% penalty; deposit of between 10m and N40m will now cost 3% and withdrawal, 7.5%. Also deposit of any sum between N3m and 10m will attract 2% charge; and 5% for withdrawal.
Also, while individuals withdrawals of more than N5m in cash will attract a penalty of 7.5%, deposit of equal amount will now attract 3% in handling charge; between N1m and 5m will attract 2% to deposit and 3% to withdraw; and 1.5% for cash deposit of between N500,000 and N1m in individual accounts, just as withdrawal of like sum will attract 2%. Cash withdrawal and deposit of less than N500,000 will continue to be at no cost.
The Bankers Committee meeting, the 493rd, also “decided that the (cashless) policy be extended to the 30 remaining states of the Federation.”
The new charges according to the CBN “circular on Nationwide implementation of the cashless policy,” date February 23, 2017, would become effective on April 1, 2017 in existing cash-less states of Lagos, Kano, Ogun, Abia, Anambra, Rivers and the Federal Capital Territory.
According to the timetable for implementation, the policy will from May 1, take effect in the 10 states of Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau; followed by Edo, Katsina, Jigawa, Niger, Oyo, Adamawa, Akwa-Ibom, Ebonyi, Taraba and Nasarawa on August 1.
The states of Borno, Benue, Ekiti, Cross River, Kebbi, Kog, Kwara, Yobe, Sokoto and Zamfara are expected to come on stream from October 1, with the income generated from the processing fees charges above the tolerable cash transaction limits to be shared in the ratio of 60:40 between the CBN and the banks.
The circular further listed lodgment accounts of revenue generating federal, states and local government agencies as those exempted from the above processing fees; just like accounts of foreign Embassies, Diplomatic Missions, Multilateral and Aid Donor Agencies in Nigeria.
Consequently, banks in the various state locations were enjoined to begin enlightenment campaigns in their various branches, including training their staff on the policy implementation to enable them provide answers to enquiries and handle customer related issues and complaints, in addition to providing advice.
Perhaps due to the non-implementation of the cashless policy faithfully, the quantum of cash outside bank vault has continued to rise according data by the CBN.
The latest date for the month of January published on its website last week, showed that estimated banknotes outside of the formal banking system dropped by N184.597 billion from N2.179 trillion at the end of December 2016 to N1.994 trillion, down 8.47% from its previous level.
The January 2017 figure, nonetheless represented an increase of about N269.449 billion or 15.61% year-on-year from the N1.725 trillion recorded in January 2016; which had also dropped from N1.857 trillion in the corresponding period of 2015.
The January 2017 figure was also higher than the N1.857 trillion recorded last November, according to the CBN data, in addition to being the highest level (besides that of last December) in years.
Apart from the latest decline, a further review of the apex bank’s data showed that currency-in-circulation had been on a regular and consistent increase since July 2016.
In the six months between July-end and December last year, the quantum of cash outside of the nation’s banking system soared by N514.676 billion or 30.92%, from N1.664 trillion.

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