Banks Gear Up For Cash-lite Extension To 5 States, FCT.

In anticipation of the extension of the cash-lite policy of the Central Bank of Nigeria (CBN) to five states and the Federal Capital Territory, Abuja, by July 1, 2013, banks have started sensitising their customers on the spread of the policy to other states.

The apex bank, which had earlier in the year announced the spread of the policy to four states, Kano, Anambra  and Abia States and the Federal Capital Territory (FCT), had added Rivers and Ogun for the next stop of the cash-lite policy.

Many banks had began sending emails and text messages to their customers to enlighten them on the policy which places a charge on daily withdrawals and deposits that exceed N500,000 for individuals and N3 million for corporate bodies. Individuals will be charged two per cent of the excess amount withdrawn and three per cent of excess deposit, while corporate bodies will be charged three per cent of excess deposit and five per cent of excess withdrawal. Also cash-in-transit lodgment and cash evacuation services will no longer be available to customers or merchants.

One of the banks in its message to customers noted that “the limits apply so far as it involves cash, irrespective of channel, that is over the counter, ATM, third party cheques cashed over the counter, etc.” For example, if an individual withdraws N450,000 over the counter, and N150,000 from the ATM on the same day, the total amount withdrawn by the customer is N600,000, and the service charge will apply on N100,000 – the amount above the daily free limit of N500,000.

“Exemptions have however been granted on lodgments and withdrawals for accounts operated by embassies, diplomatic missions, multilateral agencies, aid donor agencies, ministries, departments and agencies of government (revenue collections only), microfinance banks (MFBs) and primary mortgage institutions (PMIs).”

According to CBN’s head, Shared Services, Chidi Umeano, the states and the FCT were chosen because of the large volume of cash transactions in some of their major cities such as Aba, Kano, Port Harcourt and Onitsha among others.  The cashless policy, which implementation began in Lagos in January last year, is aimed at reducing the dominance of cash in the system. The policy specifies penal charges for individuals and corporate organisations that want to withdraw or lodge cash above prescribed limits.  Under the policy, the CBN pegged the daily cumulative cash withdrawal or deposit limit for individual accounts at N500,000 per day and N3 million per day for corporate accounts.

Umeano explained that the policy was earlier planned to be implemented in other states in January 2013 but was deferred due to some infrastructural challenges. He said the CBN was also being careful to ensure that it makes use of resources in a smart way. This was corroborated by the CBN Deputy Governor Operations, Mr Tunde Lemo, who explained, “When we talk about nationwide roll-out, we are also being careful to ensure that we make use of resources in a smart way. Cash doesn’t flow in the same volume in every state of the federation. What we would do in July is to look at those other market clusters where large volumes are transacted and add them to Lagos.”

The Deputy Governor added: “It is cheaper that way because resources needed to cover the entire 923 square kilometres in Nigeria are huge.