Nigeria’s Apex Bank to Limit & Track Huge Withdrawals – House of Reps

After the unveiling of the new naira note on Wednesday, Godwin Emefiele, the governor Nigeria’s apex bank will work with law enforcement organisations like the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices (ICPC)  and Other Related Offences Commission to track large withdrawals of cash from banks.

As the nation transitions to a cashless economy, Emefiele opined that the promotion of the cashless policy initiative was the driving force for the reissue of these notes. He also noted that the CBN will insist on the programme’s widespread implementation.

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Cashless Policy 

The new policy on cash-based transactions that has been established by the Nigeria’s apex bank, mandates a cash handling fee on daily cash withdrawals that exceed N500,000 for individuals and N3,000,000 for corporate organisations. 

The new banking policy on cash-based transactions aims to decrease the quantity of physical cash circulating in the economy and promote more electronic-based transactions.

Speaking on the cashless policy, Emefiele said “There is no economy imbued with the thinking that it has to be a cash economy; the world has moved from predominantly cash to a cashless economy. 

And I think Nigeria and the Central Bank of Nigeria are prepared to move towards a cashless economy. And that is why following the redesign and issuance of this note, we will insist that cashless will be nationwide.

We will restrict the volume of cash that people can withdraw over the counter. If you need to draw large volumes of cash, you will fill out uncountable forms; we will take your data, whether it’s your BVN or NIN so that our law enforcement agencies like EFCC and ICPC can follow you and be sure that you are taking that money for a good purpose.”

Why Nigeria’s apex bank plans to use cash policy to track huge withdrawals 

Several important factors led to the introduction of the new cash policy, including:

1. To further the modernisation and growth of payment infrastructure in Nigeria. An effective and contemporary payment system is a critical enabler for economic progress and has a favourable correlation with economic development.

2. To increase financial inclusion by delivering more effective transaction choices and a wider reach while lowering the cost of banking services.

3. To increase the monetary policy’s ability to control inflation and promote economic growth.

The cash policy also tries to mitigate some of the drawbacks caused by the extensive use of physical currency in the economy, such as:

High cost of cash: Everyone faces the high costs associated with managing large amounts of cash, from the Central Bank of Nigeria (CBN) and banks to businesses and dealers.

Cash use has a high risk: Robberies and other crimes involving money are encouraged by cash. In the event of a fire or flood, it may potentially result in financial loss.

Large subsidy: According to a CBN investigation, just 10% of daily banking transactions are over $150,000. However, that 10% account for the majority of high-value transactions. This implies that the whole banking industry foots the bill for the high cash usage costs incurred by the tiny minority of 10%.

Informal Economy: The amount of money that is spent in large quantities in cash limits the ability of monetary policy to control inflation and promote economic growth.

Inefficiency & Corruption: Among other cash-related illegal acts, high cash usage encourages corruption, leakages, and money laundering.

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