Cashless Policy: No Going Back on Deposits Charges—CBN

By Adedapo Adesanya

Despite the recent criticisms that trailed the re-introduction of processing fees on deposits and withdrawals on certain thresholds by individual and corporate bank customers in seven states of the country, the Central Bank of Nigeria (CBN) has said it won’t back down.

The apex bank had directed deposit money banks in the country to begin implementation of this cashless policy from Wednesday, September 18, 2019 and since then, many have lambasted the CBN.

Governor of the central bank, Mr Godwin Emefiele, while briefing journalists at the end of the Monetary Policy Committee (MPC) two-day meeting on Friday in Abuja, said this cashless policy was not new and that since its first introduction in 2012 and withdrawal in 2014, Nigerians had five years to bring their cash into the banking space.

“Fees on excess cash withdrawals are not new and have been in place since July 2012. Deposit fees are also not new.

“They have been in place since inception but later withdrawn in 2014 following feedback on the need for stakeholders to fully embrace electronic payment before implementation

“We believe that after five years and with all the options and channels that are currently available that we need to really embrace the best practices by saying we should go cashless in Nigeria,” the CBN chief said during the briefing monitored by Business Post.

Based on data between 2012 and 2018, Mr Emefiele said the cost of currency management in 2014 reduced by 13 percent following the first introduction of the policy including charges on both deposits and withdrawal in the ‘six cashless states’ throughout 2013.

However, Mr Emefiele disclosed that due to the suspension of the policy on deposit charges in 2014, currency management cost went up from 2015 and increased year-on-year basis to 2018 at an annual rate of 33 percent.

Mr Emefiele further noted that the policy was put in place to encourage the use of electronic means of transaction and reduce but not eliminate cash-based transactions.

“It is in the public’s interest to promote an efficient payment system via the cashless policy which helps to reduce the punitive cost of cash processing passed on to money deposit banks”

He noted  that the strategy will help promote an open and transparent system because “Cashless policy also improves transparency in financial dealings and reduction in crime such as advanced fee fraud, graft, ransom fee payment, and extortions.”

He also said that since the pilot of the cashless policy that electronic transactions had increased substantially within the Nigerian economy.

According to Mr Emefiele, “POS transactions increased by 4692 percent and we are talking about N2.27 trillion from just N48.6 billion in 2012 to N2.3 trillion at the end of 2018”

He added that electronic transfers increased significantly by 1967 percent or N76.5 trillion from N3.8 trillion in 2012 to N80.4 trillion in 2018. Cheque transactions had also reduced by 32 percent by about N2.45 billion from 7.48 billion in 2012 to 5.03 billion in 2018.

He then disclosed that financial access funds, ATMs, Agents, and Mobile Cash across each of the six cashless policy states all witnessed exponential growth.

Business Post reports that based on the new policy, individual customers would only be required to pay 2 percent fee on deposits above N500,000 and 3 percent on extra amount above N500,000 when withdrawing.

For corporate customers, they would pay 3 percent on deposits above N3 million and 5 percent on withdrawals above N3 million.