Effective immediately and until April 2024 ending, cash deposits by customers in commercial banks will henceforth not attract processing fees, the Central Bank of Nigeria (CBN) has said.
A new operational directive issued on Monday by the apex regulatory authority of the nation’s financial sector to all deposit money banks, other financial institutions, and non-bank financial institutions said processing fees previously imposed on large cash deposits have been suspended till April 30,2024.
The directive contained in circular No. BSD/DIR/PUB/LAB/016/024 of December 11, 2023 titled: Letter to All Banks, Other Financial Institutions and Non-Bank Financial Institutions: RE-Processing Fees On Cash Deposits”, directed 8The content of the circular signed by the Acting Director of Banking Supervision of the CBN, Adetona Adedeji, read: “Please recall the processing charges imposed on cash deposits above N500,000 for individuals and N3,000,000 for Corporates as contained in the “Guide to Charges by Banks, Other Financial Institutions, and Non-Bank Financial Institutions issued on December 20, 2019 referenced FPR/DIR/GEN/CIR/07/04.
“The Central Bank of Nigeria hereby suspends the charging of processing fees of 2% and 3% previously charged on all cash deposits above these thresholds with immediate affects. This suspension shall remain in effect until April 30,2024. Consequently, all financial institutions regulated by the CBN should accept all cash deposits from the public without any charges going forward.”
Analysts said on Monday that the directive was a direct fallout from the development in the banking sector which has discouraged customers from taking their cash to banks.
In recent times, bank customers have been facing difficulties withdrawing cash from banks due to scarcity of supply.
Although the CBN has said that the scarcity of cash has nothing to do with the problems associated with its currency redesign policy, the situation has persisted.
It is believed that the new directive would encourage bank customers to make more cash deposits, which would invariably enhance liquidity in the financial system, and make more cash available for businesses.
Back story
In 2019, the apex bank introduced a policy where bank customers were compelled to, effective September 19, 2019, pay some charges for cash deposits and withdrawals. The CBN, in a circular to all banks, said the transaction fees policy was introduced to discourage cash deposits by bank customers.
The CBN said all cash transactions would attract a 3% processing fees for withdrawals and 2% processing fees for lodgments of cash above N500,000 for individual accounts.
Also, the CBN said under the policy, Deposits Money Banks (DMBs) were free to charge 5% processing fees for withdrawals and 3% processing fees for lodgments of amounts above N3,000,000 in corporate accounts.
However, barely a year later, the CBN introduced another policy mandating banks and other financial institutions, effective January 9, 2023, to ensure that over-the-counter cash withdrawals by individuals and corporate entities did not exceed N100,000 and N500,000, respectively, per week.
All cash withdrawals above the stipulated limits attracted processing fees of 5% and 10% respectively.
The policy which introduced shortly after unveiling of the newly redesigned N200, N500, and N1000 banknotes, was meant to discourage bulk withdrawal of cash by politicians in the build up to the last general elections in the country.
The subsisting problem of cash squeeze in banks has piled pressures on the CBN to find solutions to the challenge.
