Tarry awhile on deposit charges
Three years after it stopped charges on cash deposits in banks following introduction of cashless policy, the Central Bank of Nigeria [CBN] has reintroduced the charges, to take effect at different dates in different parts of the country. In a circular titled “Nationwide implementation of the cashless policy,” CBN’s Director, Banking and Payments Systems Department […]
Three years after it stopped charges on cash deposits in banks following introduction of cashless policy, the Central Bank of Nigeria [CBN] has reintroduced the charges, to take effect at different dates in different parts of the country. In a circular titled “Nationwide implementation of the cashless policy,” CBN’s Director, Banking and Payments Systems Department Dipo Fatokun announced that charges for cash deposit by individuals less than N500,000 will attract zero charge; N0.5million to N1 million, 1.5 per cent; N1-5 million, two per cent charge; above N5 million, 3 per cent charge.
Charges for cash withdrawal by individuals are: less than half a million, zero charge; from N0.5million to N1 million, two per cent; N1-5 million, 3 per cent charge; above N5 million, 7.5 per cent charge. Charges for corporate cash deposit are: less than N3 million, zero charge; N3-10million, two per cent; N10-40million, three per cent; above N40 million, five per cent. Charges for corporate cash withdrawal are: less than N3 million, zero charge; N3-10 million, five per cent; N10-40 million, 7.5 per cent; above N40 million, 10 per cent.
The new charges would take effect from April 1, 2017 in the existing cashless states: Lagos, Ogun, Kano, Abia, Anambra, Rivers and FCT, and shall take on May 1, 2017 in Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau. “The policy shall be implemented with the charges taking effect on August 1, 2017 in Edo, Katsina, Jigawa, Niger, Oyo, Adamawa, Akwa Ibom, Ebonyi, Taraba and Nasarawa. The policy shall be implemented with the charges taking effect on October 1, 2017 in Borno, Benue, Ekiti, Cross River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara.”
Considering the harsh economic situation in the country, these charges are uncalled for. These harsh charges will discourage many customers from taking their money to the banks and seeking bank facilities. There are already many bank charges in Nigeria such as COT, VAT and stamp duty. Right now, over 40 million Nigerians operate outside the banking sector while 95 per cent of bank customers in Nigeria are poor citizens who struggle to make a living every day.
Though the policy would reduce money laundering, reduce cash movement and help to check unnecessary withdrawals, the importance of finance inclusion and literacy is to bring more customers into the saving culture. Both the rich and the poor should be encouraged to save money for the future but multiple charges might discourage depositors. These charges mean that for every saving a customer makes, he or she pays a stiff penalty. This could reverse the gains already made in encouraging more people to bank their money. More people will keep their money at home and also spend their money recklessly because it is reachable in their pockets.
Apart from the wrong timing of this policy, the bars set are too low for an economy that has poor alternative methods of payment. Most small and medium enterprises [SMEs] operate largely outside the banking system and their customers mostly transact in cash. Those of them that collect their payments mostly in cash from small customers will find that they easily cross the deposit bar and are taxed heavily when they try to deposit in the banks. If the banks are finding the economic environment to be very challenging, they should not shirk their responsibility from serious/real banking and instead try to transfer the burden to hapless customers.
The cashless policy has been on for 10 years and was suspended at some point. One of the reasons it was suspended was to allow the roll out of technology for alternative payment systems. This technology is still woefully inadequate. Also, it is mostly concentrated in urban areas. Even there, the long queues at ATM machines, the frequent breakdown of POS machines and the poor network services that often impede online transactions all add up to advise CBN to make haste slowly in this matter. It cannot do away with Nigeria’s cash-based economy overnight by killing the innocent person.