Banks in Nigeria will from Monday, April 3, 2017, begin to impose punitive charges on cash transactions above thresholds set by the Central Bank of Nigeria (CBN) on their customers in six states namely: Lagos, Kano, Ogun, Abia, Anambra, Rivers and the Federal Capital Territory.
The move is expected to check the high level of currency-in-circulation (outside of the nation’s banking system) and the attendant cost of managing such, including printing, logistics and maintenance, according to a CBN circular signed by Dipo Fatokun, its director of Banking & Payment System Department.
According to the apex bank, according to the circular titled “Nationwide implementation of the cashless policy,” date February 23, 2017, in line with the February 8, 2017 decision of the Bankers’ Committee, corporate cash withdrawals and deposit of less than N3m would be free of charge. Deposits above N40m will attract 5% charge and withdrawal, 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.”
Going by the implementation timetable, 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 N184.597bn from N2.179tr at the end of December 2016 to N1.994tr, down 8.47% from its previous level.
The January 2017 figure, nonetheless represented an increase of about N269.449bn or 15.61% year-on-year from the N1.725tr recorded in January 2016; which had also dropped from N1.857tr in the corresponding period of 2015.
The January 2017 figure was also higher than the N1.857tr 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 N514.676bn or 30.92%, from N1.664tr.