CBN increases charges on cash deposits, withdrawals
Adesola Afolabi was a businessamlive reporter and Head of Financial desk.
From Wednesday, September 18, 2019 charges collected by banks from individuals who deposit cash above N500,000 will increase to 2 percent from 1.5 percent.
The CBN had in February 2017, introduced charges on cash transactions in a bid to implement it’s cashless policy but later suspended it.
However fresh directives issued Tuesday by the Central Bank of Nigeria (CBN) to all Deposit Money Banks (DMBs) operating in the country indicated that the policy’s implementation commences today (Wednesday) with stricter instructions to be adhered to by the banks.
According to the directive, the CBN indicated that individual customers, who withdraw above N500,000 be charged a 3 percent processing fee, as against 2 percent charged before.
As for corporates, processing fees for both deposits and withdrawals above N3m were pegged at 3 percent and 5 percent respectively. This is in contrast to the 2 percent and 5 percent fee erstwhile charged on deposits and withdrawals respectively.
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The directive released Tuesday and signed by Sam Okojere, director payments system management department of the CBN, stated that the charges would be applied first to customers based in selected Nigerian cities namely; Lagos, Ogun, Kano, Abia, Anambra, Rivers State and the Federal Capital Territory (FCT) Abuja while national implementation will commence next year.
“Charges on deposits shall apply in Lagos, Ogun, Kano, Abia, Anambra, Rivers State and FCT, in addition to already existing charges on withdrawals, effective September 18, 2019,” the circular partly read.
According to the circular, nationwide implementation of the cashless policy will take effect from March 31, 2020.
To further promote the cashless policy and enhance the collection of applicable government revenues, the CBN also announced a review of the process for merchant settlement.
It added that with effect from Tuesday, September 17, the CBN had given approval for banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulations.
In a different statement also signed by
Okojere, the CBN, said a downward review of the merchant service charge had been approved.
It said henceforth, the charges had been reduced from 0.75 percent capped at N1, 200 to 0.50 percent capped at N1, 000.
The CBN explains that the vision of the cashless policy is to drive development and modernization of the country’s payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020.
The apex bank notes that an efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
Other key benefits of the policy highlighted by the CBN, includes: reduction in cost of banking services (including cost of credit) as well as a drive towards financial inclusion through the provision of more efficient transaction options and greater reach.
The CBN also said the policy will improve the effectiveness of monetary policy in managing inflation and driving economic growth.
In addition, the cash policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including: high cost of cash, high subsidy, inefficiency and corruption among others.