Cash-Lite and E-Payment Systems: Nigerian banks to save N192bn

Nigerian banks are expected to cut down on operating expenses significantly from next year through a cost trimming process emanating from the deployment of cash-lite and e-payment transactions system.

Expert said by eliminating the “cash-and-carry” status of the banking system for the use of electronic channels, the cost of doing business in the industry would crash and the capacity of the banks for financial intermediation greatly enhanced.

The Managing Director of the Financial Derivatives Company Limited, Mr. Bismarck Rewane, said at the Lagos Business School 2011 End of Year Dinner held recently in Lagos that the direct cost of cash management borne by banks was as huge as N114.5 billion in 2009, adding that it is projected to increase by 68 per cent in 2012 to N192 billion.

This is a cost that the banks will do away with in the electronic payments era, thus making credit and other services of the banks cheaper for customers, he said.

“The cash-lite initiative is targeted at reducing lending rates by cutting down banks’ operating expenses by as much as 30 per cent to make it possible for both large and small businesses to access credit at affordable rates,” said Rewane.

According to the analyst, the cash-lite and e-payment system initiative embarked upon by the Bankers’ Committee and billed to take-off 1st January, 2012, has also raised the value of inter-bank transfers and settlements by 27.3 per cent to N83.6 trillion as against the N65.7 trillion in 2010.

“Also, the value of cheques rose by 21.4 per cent in the first nine months to N12.33 trillion, as against N10.15 trillion in the corresponding period in 2010″, he said.

The Central Bank of Nigeria (CBN) in the new cash-lite banking regime permits a daily cumulative limit of N150,000 and N1 million on free cash withdrawals and lodgments by individuals and corporate customers, respectively.

Individuals and corporate organisations that make cash transactions above the limits will be charged a fee of N100 per thousand and N200 per thousand respectively while third party cheques above N150,000 will not be eligible for encashment over the counter and would only be paid through the clearing house.