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CBN moves against increasing cash dominance in economy

By on April 29, 2011

The Central Bank of Nigeria in collaboration with the Bankers Committee has adopted policies to reduce the high usage of cash to moderate the cost of cash management and encourage the use of electronic payment channels.

The CBN said on Thursday, in a circular on its website, that it issued the industry policy on retail cash collection and lodgement in view of increasing dominance of cash in the economy with its implication for cost of cash management to the banking industry, security and money laundering.

The CBN said, “Commencing from June 1, 2012, a daily cumulative limit of N150, 000 and N1,000,000 on free cash withdrawals and lodgements by individual and corporate customers respectively with Deposit Money Banks 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 per thousand and N200 per thousand respectively for amounts above the cumulative limits.”

It pointed out that contravention of the policy by any DMB would attract a fine of five times the amount the bank waived as a first offender, adding that subsequently, the bank would pay ten times the charges waived.

The circular added, “Third 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. If a bank allows third party cheque encashment, it shall be liable to a sanction of 10 per cent of the face value of the cheque or N100, 000 whichever is higher.

“Furthermore, banks will cease cash in transit lodgement services rendered to merchant-customers from June 1, 2012. In this regard, customers could engage the services of the CBN licensed cash-in-transit 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 N1m per specie movement.”

The apex bank, however, said that the arrangement would be in force in Lagos, Abuja, Port-Harcourt, Kano and Aba in the first instance, adding that it would be extended to other parts of the country at a date to be determined by the Bankers Committee.

It added that the policy would apply to both private and public sector transactions, noting that compliance with the policy would be monitored by the Banking Supervision Department and the Other Financial Institutions Supervision Department with appropriate sanction applied to erring institutions.

Source : Punch