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Home News 3% Cashless Policy deduction : All you need to know, ...
Naira note cashless Policy

3% Cashless Policy deduction : All you need to know, what Nigerians are saying

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Di new Central Bank of Nigeria (CBN) cashless policy wey land on Wednesday dey pinch Nigerians so tey some dey vex, odas dey tok dia mind as e worry dem.

Di Central Bank announce say dem dey add processing fees for anyone wey wan deposit money pass a particular amount – in addition to di fees wey don dey for withdrawal.

For individuals, any cash deposit way pass N500,000 ($1,389) go attract charge of 2% of dat extra amount, whereas for companies, na 3% of anything wey dey above N3 million ($8,334).

CBN tok for statement say dis new policy na part of dia plan to make Nigerian use cash less, although dem say dis no be to comot cash patapata.

 

But Nigerians no wan hear dis one oh, as dem don start to dey tok dia mind for social media.

But wetin be dis new change for CBN cashless policy

Image copyrightCBNDi September 2019 statement wey CBN comot on cashless policy
Account Type Withdrawal / Deposit limits Charge fee ontop withdrawal Charge fee ontop deposit
Individual Above N5,000,000 3% 2%
Company Above N3,000,000 5% 3%

Central Bank of Nigeria tok say di new change go start on Wednesday, 18 September for six states for Nigeria wey be Lagos, Ogun, Kano, Abia, Anambra, Rivers States plus Abuja. Dem come add say dem go do am all over di kontri for 31 March, 2020.

Di Cashless Policy no be new tin wey CBN carri come as e don dey since like 2011. Wetin look like say dey new na di charge wey don dey for di cash money wey pesin wan deposit.

But for CBN website, dem make am clear say di charge na ontop dat extra amount wey dey above di limit. So for instance, if company deposit cash of N300,500,000, di charge wey bank go collect go be N15,000 wey be 3% of N500,000 (and no be of N300,500,000)

Still a lot of pipo na im no go like dis because dem see am like punishment of average Nigerians, especially traders, wey dey struggle inside di hard economy.


In English :

Cash-less Policy Nigeria

The Central Bank of Nigeria (CBN) has introduced a new policy on cash-based transactions which stipulates a cash handling charge  on daily cash withdrawals that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. The new policy on cash-based transactions (withdrawals) in banks, aims at reducing (NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)

What Nigerians are saying

A Fokken Queen!  @cremechic11

In an economy where barely 40% of the population have bank accounts & a poor mobile money system, this CBN policy will cause more problems than it set out to solve

You can’t be enforcing a cashless policy with punitive measures when the infrastructure to go cashless is deficient


Dr. Dípò Awójídé

@OgbeniDipo

Why do I need to pay an extra 2% when I deposit over N500,000 or pay 3% when I withdraw same? After paying account maintenance charges monthly, ATM maintenance charge, stamp duty charges and transaction charges when I transfer to other banks? This cashless policy is confusing.

 


Dr. Joe Abah
@DrJoeAbah

Our Central Bank still thinks we are in the military era. If, for whatever reason, you are going to introduce charges for deposits, will you just issue a circular? No explanation? No justification? No sensitisation? You just issue a circular and call it cashless policy? Na waa o.


C’Emeka Egesi

21 hours ago

CBN’s reintroduction of charges on cash deposits and withdrawals, is simply a policy somersault that will eventually discourage Cashless Policy.

Why don’t they think of monthly incentives & bonus interest for those already using cashless policy through online transfers, ATM transactions, USSD transactions, cheque payments etc
to encourage the implementation of cashless policy, instead of using charges to discourage people from depositing or withdrawing cash.

This harsh policy failed to take into consideration that there are up to 60% informal economic sector (International Monetary Fund (IMF) estimating it to constitute about 60% of the entire Nigerian economy).
transactions that must always go on with cash due the lack of adequate infrastructure that is also affecting the cashless policy.
Why punish the citizens further, on obvious govt and institutional failures to organise the system?

There are too many charges already discouraging people from using bank accounts; such as Stamp Duty Charges, VAT, SMS alert, COT, Transfer charges, ATM maintenance charges etc.
Upsidedown Policy!??‍♂??‍♂??‍♂
#SayNoToChargesOnDeposits


Why the Cash Policy According to CBN

The new cash policy was introduced for a number of key reasons, including:

  1. To drive development and modernization of our payment system in line with Nigeria s vision 2020 goal of being amongst the top 20 economies by the year 2020. An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
  2. To reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
  3. To 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: There is a high cost of cash along the value chain – from the CBN & the banks, to corporations and traders; everyone bears the high costs associated with volume cash handling.
  • High risk of using cash: Cash encourages robberies and other cash-related crimes. It also can lead to financial loss in the case of fire and flooding incidents.
  • High subsidy: CBN analysis showed that only 10percent of daily banking transactions are above 150k, but the 10percent account for majority of the high value transactions. This suggests that the entire banking population subsidizes the costs that the tiny minority 10percent incur in terms of high cash usage.
  • Informal Economy: High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.
  • Inefficiency & Corruption: High cash usage enables corruption, leakages and money laundering, amongst other cash-related fraudulent activities.

Content of the Cash policy

The following aspects of the policy was applied from January 1st 2012 in Lagos State (�tagged Cash-less Lagos�):

  • Only CIT licensed companies is allowed to provide cash pick-up services. Banks will cease cash in transit lodgment services rendered to merchant-customers in Lagos State from December 31st 2011. Any Bank that continues to offer cash in transit lodgment services to merchants shall be sanctioned.
  • 3rd party cheques above N150, 000 shall not be eligible for encashment over the counter. Value for such cheques shall be received through the clearing house.

The service charge took effect from March 30th, 2012, this gave people time to migrate to electronic channels and experience the infrastructure that has been put in place. Banks were to use this period as grace to encourage their customers to migrate to available electronic channels, and where possible, demonstrate the costs that will accrue to those that continue to transact high volumes of cash from March 30th, 2012 in Lagos State.

In addition, below are some detailed context and pertinent clarifications on the policy:

  • Location
    • The pilot was run in Lagos State from January 2012 while the policy took effect in Rivers, Anambra, Abia, Kano, Ogun and the Federal Capital Territory (FCT) on the 1st July, 2013. The policy will be implemented nationwide on July 1st, 2014.
  • Account Application
    • The cash-policy applies to all accounts with exception to Government revenue generation account, Primary Mortgage Institutions, Microfinance Banks and Embassies. Banks should therefore work with their corporate customers to arrange for suitable e-collection options.
  • Limits
    • The limits are cumulative daily limits each for withdrawal(e.g. for Individuals, the daily free withdrawal limit is N500,000)
    • The limits apply to the account so far as it involves cash, irrespective of channel (e.g. over the counter, ATM, 3rd party cheques encashed over the counter, etc) in which cash is withdrawn (e.g. 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). The limit also applies to cash brought through CIT companies, as the CIT company only serves as a means of transportation.

READ ALSOCashless policy ( 3% deduction ) : LCCI seeks more time, enlightenment

  • Charges
    • The charges started to apply from March 30th 2012 in Lagos, October 1st 2013 in Rivers, Abia, Anambra, Ogun, Kano and the FCT.
    • The service charge for daily withdrawals above the limit into an account shall be borne by the account holder.
    • Please note that the policy does not prohibit withdrawals above the stipulated amounts, but that such transactions will be subject to cash handling charges.

Expected Benefits of the New Cash Policy

A variety of benefits are expected to be derived by various stakeholders from an increased utilization of e-payment systems. These include:

  • For Consumers: Increased convenience; more service options; reduced risk of cash-related crimes; cheaper access to (out-of-branch) banking services, access to credit and financial inclusion.
  • For Corporations: Faster access to capital; reduced revenue leakage; and reduced cash handling costs.
  • For Government:Increased tax collections; greater financial inclusion; increased economic development. Increased tax collections; greater financial inclusion; increased economic development.

Current Awareness/Engagement Status

The CBN has been running targeted stakeholder engagement sessions for key groups that will be most impacted by the cash policy as a first stage of its planned communication campaign, with the objective of creating awareness and providing an opportunity for stakeholders to raise issues and get on the spot clarifications. These stakeholders includes markets, associations, professional bodies, religious bodies etc. These stakeholder sessions have run nationwide while the media campaign will continue.

 

CREDIT : BBC PIDGIN , CBN and EJES GIST

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