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Furore over CBN’s new cashless policy

By Victor ‘Tunde Oso

The Central Bank of Nigeria’s directive that, from Wednesday, September 18, 2019, Deposit Money Banks would impose three per cent processing fees for withdrawals and two per cent processing fees for lodgments of amounts above N500,000 for individual accounts has stirred some controversies among members of the public.

MPR, CBN Governor, Mr Godwin Emefiele, cashless policy
CBN Governor, Mr Godwin Emefiele

The apex bank’s circular to DMBs stated that for corporate accounts, banks would charge five per cent processing fees for withdrawals and three per cent processing fee for lodgments of amounts above N3 million. The statement said charges were introduced to drive development and modernisation of the country’s payment system in line with the Vision 2020 Goal of being amongst the top 20 economies by the year 2020.

This directive, coming so soon after Federal Government announced plan to increase Value Added Tax (VAT) from 5% to 7.5% has generated some criticisms and reactions in the polity.

Firing the first salvo, Country Director of Development Alternatives, Inc., Dr. Joe Abah, tweeted that the CBN had acted as if the nation is still under military rule, criticising the arbitrary manner the apex bank made the announcement and its implementation.

In other reactions monitored by Sunday Vanguard on the social media, Dr. Dipo Awojide, Senior Lecturer in Strategy, Nottingham Business School said: “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.

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For Ayobami Oyalowo, no matter what anyone says, this new CBN policy is punitive and exploitative, with banks already stealing from us and making huge kill with all forms of spurious accounts maintenance charges, ATM Withdrawal Charges, SMS charges et cetera. This is pure wickedness and should not stand.

Ola Ranger said: “The charge should be on withdrawal, why charge for deposit? This will surely discourage people from taking such monies to the bank. I foresee a spike in the sale of vaults and fire proof cabinets.

According to Martina Onomiwu, “expect robberies of all sorts, as I trust my Alaba brothers that they will rather keep their millions at home than allow 5% of it to go.”

Alexander Phillip said, for clarity, there are reasons why people make large withdrawals, and the most is buying of goods. If the man who sells plumbing materials has a PoS, and you are buying goods worth N600,000, the time you use to go to the bank for withdrawals is automatically saved because you’ll pay via his machine at no extra cost and same thing to the seller. If the seller has no PoS machine, and you pay charges for on-the-counter withdrawal, he also will pay charges for on-the-counter deposit.

Sola Akinbo however, provides a different perspective, maintaining it is a good policy. Cash driven economy is expensive for the CBN as well. We need record of transactions which cash does not offer us. Cash handling is expensive for banks. And it doesn’t mean people can’t pay, it’s just that it comes at a cost. I have led bank branches. If there is no cash or it’s not much, some folks will be alive today. Cash demand leads to excess vault limits. You don’t want to witness such robbery. Cash pilferages have killed some small businesses. I believe we need to reduce our cash handling.

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For Ogunmekan Seun, government is just finding a way to limit our dependence on physical cash. If it was for money making, they won’t even make the charges high so that everybody will fall into the trap. It is welcome and long overdue.

Rhynos Consult said: If it is for N500, 000 and above lodgments, it will not affect the poor, seeing that poor people don’t make such lodgments. I think it is a type of tax against the rich.

The  CBN, however, responding to the outcry, said on its Twitter handle that the Cashless Policy deposit/withdrawal charge is only on the amount in excess of the limit. “For instance, if you deposit a cash of N501, 000.00. N1, 000.00 is in excess of the limit. The bank will charge you 2% of N1, 000.00, which is N20.00.”

Vanguard

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