CBN imposes limits, penalty on cash transactions….N150,000 for individuals; N200,000 for corporate organisations | Welcome to Linda Ikeji's Blog

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Sunday, 1 May 2011

CBN imposes limits, penalty on cash transactions….N150,000 for individuals; N200,000 for corporate organisations

From June 2012, individuals that make cash withdrawal or deposit above N150,000 would pay a fine of N100 per extra N1,000, while corporate organisations that make cash withdrawal or deposit above N1 million would pay fine of N200 per extra N1,000.

These limits for free cash withdrawal and deposits were part of a new policy aimed at reducing the high usage of cash in the economy announced by the Central Bank of Nigeria, CBN, on April 28.

So let me get this straight. If I want to withdraw say N1m, I will pay the bank N85, 000 as penalty? For withdrawing my own money? And no third party cheques above N150,000 across the counter? How will this work? I'm really trying to make sense out of this, won't this move cause inflation or something? And won't it result to people keeping money at home instead?

Read the CBN policy after the cut and tell us what you think.


The policy, which would be enforced in Lagos State, Abuja, Port Harcourt, Kano and Aba in the first instance also banned encashment of third party cheques above N150,000 across the counter

The policy was contained in a circular signed by Mr Muhammad Nda, Director, Currency Operations Department and addressed to all banks, Cash In Transit (CIT) companies and electronic payment providers.

The circular entitled: “Industry policy on retail cash collection and lodgement” stated: “In view of increasing dominance of cash in the economy with its implication for cost of cash management to the banking industry, security, money laundering, etc., the Central Bank of Nigeria, in collaboration with the Bankers Committee, is adopting policies to reduce the high usage of cash, moderate the cost of cash management and encourage the use of electronic payment channels. Consequently, the Central Bank of Nigeria hereby directs as follows:

The limits

“Commencing from June 1, 2012, a daily cumulative limit of N150,000 and N1,000,000 on free cash withdrawals and lodgments by individual and corporate customers respectively with Deposit Money Banks (DMBs) shall be imposed. To this end, individuals and corporate organisations that make cash transactions above the limits will be charged a penal fee of N100/thousand and N200/thousand respectively for amounts above the cumulative limits.

“Contravention of this policy shall attract a fine of five (5) times the amount that the bank waives as a first offender. Subsequently, the bank shall pay ten (10) times the charges waived.

“Furthermore, 3rd party cheques above N150,000 shall not be eligible for encashment over the counter. Value for such cheques shall be received through the clearing house.

Penalties

“If a bank allows 3rd party cheque encashment, it shall be liable to a sanction of 10% of the face value of the cheque or N100,000 whichever is higher.

“Banks will cease cash in transit lodgment services rendered to merchant_customers from June 1, 2012. In this regard, customers could engage the services of the CBN licensed cash-in-transit (CIT) companies to aid cash movement to and from their banks at mutually agreed terms and conditions.  Contravention of this policy shall attract a fine of N1.0 million per specie movement.

“This arrangement shall be in force in Lagos State, FCT, Port Harcourt, Kano and Aba in the first instance. The arrangement shall be extended to other parts of the country at a date to be determined by the Bankers Committee.”

“To achieve interoperability of local currency POS transactions, no  card scheme, foreign or local, shall operate exclusive acquirer agreement or contract in Nigeria with effect from June 1, 2011. Any payments scheme, processor, switching company, service provider or bank that contravenes this policy may be suspended for a minimum of one (1) month by the CBN as a processor, switching company, service provider etc in the first instance. The license may be withdrawn by the CBN if the contravention is repeated.

“This policy shall apply to both private and public sector transactions.  All financial institutions including Deposit Money Banks, Savings and Loans, Mortgage and Microfinance Banks shall comply accordingly.

“Compliance with the policy shall be monitored by the Banking Supervision Department and the Other Financial Institutions Supervision Department with appropriate sanction applied to erring institutions.

“While the Central Bank of Nigeria will make general announcements and carry out public awareness programmes individual banks are expected to do same. The affected customers of banks should be informed in good time by the banks with clear advice on alternative electronic payment channels available to them.”

Source

22 comments:

Anonymous said...

Well you have gotten the maths wrong if you want to withdraw a million naira you would pay a penalty of N85,000 not N8,500 going by the rate you mentioned for withdrawing your own money, as for how this would work its simple it wont people would start using odeshi to save their money at home either that or it would fade out be officially or unofficially repealed like every policy we dont like usually does in naija so am not worried. Happy new month.

Tara

SiSi London said...

that is nonsense. nigeria is still essentially a cash-based society. we dont have the neccesary infrastructure to enable people go without cash. if you enter ladipo market to replace your auto parts do you think anybody there is going to have a POS for you to swipe your card? have we even finished solving the rampant ATM fraud problems?these banking leaders are not even in touch with reality.

Anna said...

Well, from what I can see Linda has gotten it right, because she did say 85,000 Naira.
I think its a smart plan, but more people will start using debit and credit cards, and then there's the risk of credit card fraud, and so on...Nigerians WILL definitly find a way around, we are too gifted lol

Oh ya I love your blog Linda :)

Femiluv said...

I guess anyone who has taking Basic/Intermediate Macroeconomics, or is an economist will agree that this is good for the economy in the long run.

And no Linda, this won't cause inflation. To summarize, excess money circulating around is what causes inflation

Black Celebrity said...

I can't imagine the speaker of the house of rep or a state deputy governor to be bound by this kind of policy.

just imagine I want to buy a new car that is worth 3 million naira, I'll have to cough out N85,000 x 3 to GTB...or start withdrawing 150,000 everyday and keeping the money inside the ceiling till the money is complete.

Na Na Na we never chop belle full......just like the coin policy didn't work, IT WON'T WORK

The Corner Shop said...

All i can say is hissssssssssss!!! People's bank will just be under the mattress mehn

Adiya

Tito said...

I DONT NEED TO READ THIS TO KNOW THIS IS A RUBBISH POLICY AND ALMOST AGAINST HUMAN RIHT SEF! AGAIN IS NIGERIA NOT TRYING TO GIVE POWER TO TH ERICH AGAIN? PLS ANSWER O... BULLSHIT!

Alicia says... said...

when all the politicians are looting their money, does it apply to them?

Anonymous said...

Of course inflation increases. Either all non cash transactions have a 10% penalty built in, or people find ways to hold lots of cash...

CLEMENT said...

well, it is bcos of politician's loots dat policies like dis are made, cos it will encourage more Electronic pymts which can easily be traced to Thieves' accounts; in d 'nearest-long run', dis policy will help us greatly. And SisiLondon, Ladipo pple don't need 2 have a POS, but money can be trsf'd to their accounts as pymt(dis can be confirmed by phone alert)during purchases. Almost all the mechanics have accounts now.

Anonymous said...

I love you Linda but you really should read up on some Economics to know this is a good plan. Of-course inflation will increase in the short run. But longterm economic plans are best and this is a great plan in the long run. Also we need to move away from being a cash based society. In 2011 there is no excuse for having 100,000 naira just in your pocket. It is also very unsafe. At least if a thief steals you card you can call the bank to stop all transactions before the thief even makes it there.
This new deal will also make it easier to track fraudulent accounts.
Only people who will have problems with this plan are people who do not know much about economics or people who are fraudulent themselves.
Linda I know your case is the former;)

Anonymous said...

Most Nigerians do not have access to bank account anyway and this policy will just encourage more people to keep their cash at home as most Nigerians will not be able to afford the withdraw fees, thus increasing pressure on banks themselves to generate money. Even 5000 naira is a lot of money- how many people can get their hands on 5000 naira? We need to solve the problem with our currency first before talking about putting penalties on cash withdrawals.

Obiora said...

This will only be hard adjusting to but will be beneficial in the long run.

For instance following the musings of a contributor here, if you want to buy a N3m car, all you have to do is to either:

a) Call your account officer and do an interbank transfer, this will take only 24hrs and you collect your car the next day.

b) Raise a bank draft or give the dealer a cheque and collect the car 3 days later after your dealer's received value.

Groceries and other shoppings can be done with debit cards. If you're in an open market, spare parts market etc, they all have bank accounts and account officers especially if they regularly deal with transactions up to N150k.

If your company has staff to pay, all banks can aid you with salary accounts and payroll administration, instead of withdrawing cash to share to them.

I personally don't see the reason why an individual should have more than N150 or 200grand cash on them at any point in time since nearly everyone has a bank account, there are ATMs everywhere and POS terminals are sprouting up at important places as well.

Bureau de Changes deal with accounts & account managers as well.

Perhaps there may be other scenarios but I bet they can all be worked out too.

It's like quitting smoking, it's hard & painful at first, but it's good and best for you.

SiSi London said...

CLEMENT what are you even saying sef? I used to work in a bank in Ladipo and that is exactly what those traders do. they transfer money from one account to the other and confirm purchases and it is not efficient. what you want to do in an ideal situation is keep most transactions out of the bank and you need a point-of-sale terminal to do that. do we have infrastructure for that? no. by infrastructure i mean stable power supply and wide spread access to internet.
If you have a system that works and is effective, you won't need a ban/fines to enforce it.
we all get the essence of the policy but when it comes to execution, i have to say our leaders are clueless.

Anonymous said...

this man is officially working with armed robbers cause all i can see is the rate of robbery shooting through the roof as people will resort to keeping money at home which means death toll rises and in essence he is just trying to control the population... hmmm

Anonymous said...

people dont get upset, the banks will find a way around it

alleny said...

Plz spare me CBN, whether it is good plan or not, I dont want to know, all I know is that for a poor man that managed to save N1m in his account and wants to collect his money and you ask him to go bring another N85k is bull-shit, make them go have a rethink.

hater said...

i hiss in my dialect!

i trust naijas! we would find a way around it and die a quick death!

Anonymous said...

call me a fruitcake but presumably this is part of the new world financial agenda designed to keep track of all our spending habits, etc.

Anonymous said...

they shld focus on important issues...does dt apply to politicians aswell???

Chilling said...

Alicia, politicians carry dollars around! I'm not a politician but i operate a "dom" account in Lagos (like a lot of people) and was withdrawing dollars all through April!
Good intentions but it won't work IMHO. People will now start keeping huge sums of money at home.

Anonymous said...

Egbami enn what is the foolishness coming from this man's mouth so i cannot go and collect my money any longer from the bank without being charged a fee haba na wahala be this ooo. This is going to cause a lot of problems for the economy and I am speaking as a finance person myself rubbish!!!

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