CBN defends cash withdrawal limit policy before Senate despite Reps’ disapproval

It appears the Central Bank of Nigeria (CBN) appears to be unmoved in the pursuit of its recently-announced cash withdrawal limits, despite the mixed reactions the policy has attracted since it was announced last Tuesday.

Recall in a letter to financial institutions dated December 6, 2022, the Nigerian apex bank said that with effect from January 9, 2023, bank withdrawal limits for individuals and organisations will be 100,000 and 500,000 Naira respectively.

The letter also stated that ATMs should only dispense 200 naira notes and withdrawals will be capped at 100,000 Naira per week, with a 20,000 naira maximum per day. PoS withdrawals will be capped at 20,000 Naira daily. The policy also meant all cash withdrawals above the stated limits will attract processing fees of 5% and 10%, respectively.

The new policy — coming a few weeks after President Muhammadu Buhari unveiled new Naira notes — was immediately met with condemnation from elected officials and of course, Nigerians.

For instance, the Senate President, Ahmad Lawan, speaking on the floor of the Senate, noted that this aggressive move towards a cashless society is premature and not thought through.

Consequently, the House of Representatives ordered the CBN to suspend the new cash withdrawal limits. After the announcement on Tuesday, the house invited the CBN governor, Godwin Emefiele for a session with lawmakers who grilled him on policies that the body has introduced in recent times.

In reaction, CBN Governor, Godwin Emefiele said the withdrawal limits would be reviewed upward with time.

Read also: CBN governor insists on new withdrawal limits as House of Reps orders suspension

Still, no going back on cash withdrawal limits

Last Friday, the CBN Deputy Governor on Financial System Stability, Mrs Aisha Ahmad insisted that the cash withdrawal limit move was in line with the cashless policy which the apex bank introduced in 2012 during the administration of then-president Goodluck Jonathan.

Speaking at her appearance for a screening before the Senate Committee on Banking, Insurance and other Financial Institutions, to confirm her re-appointment, Ahmad disclosed that the information available to the CBN shows that the time for full implementation of the policy with the proposed limit on cash withdrawals per week is now.

She said: ”Required infrastructure for its implementation in terms of financial access point system, mobile money, e – naira, etc. are available across the 774 local government councils in the country.

”All fears and worries being expressed by Nigerians on the planned limited cash withdrawal policy are seriously being taken care of as nobody or section of Nigerians will be left out.

– Mrs Ahmad

”In the past, banking transactions in Nigeria were limited to Bank Branches alone as the only means which had now expanded into multiple electronic platforms as well as a geometrical increase in the number of agents from 88,000 to 1.4 million.’’

Read also: How the new CBN policy on over-the-counter withdrawals affects PoS transactions.

The two sides of the controversial policy

If anything, the cash withdrawal limit policy has sparked outrage from Nigerians, as many believe the CBN is on a wild goose chase, considering the fact that cash remains king on Nigerian streets. For one, Point of Sale (PoS) transactions — which have gained traction among Nigerians in recent years — will be affected by this policy.

In truth, though the CBN introduced the cashless policy ten years ago, Nigeria’s economy is still largely cash-oriented, albeit the situation is gradually changing. According to data from the Nigeria Inter-Bank Settlement Systems (NIBSS), e-payment transactions hit ₦32.8 trillion in September. This means one thing: Nigerians are gradually going cashless.

But on the flip side, the cash withdrawal limit policy, according to some experts, may be beneficial in the long run, particularly in ushering Nigeria further into a cashless society — which has been a major talking point for Emefiele.

“Several initiatives by the CBN have tried to encourage both financial inclusion and a cashless society, however, these have been largely ineffective. The new CBN policy will certainly aid in accelerating the monetary policy objectives, whilst also tackling the insecurity challenges and encouraging financial inclusion,” Ibrahim Shelleng, a wealth management and business development consultant, told This Day newspaper last week.