By UDEME CLEMENT

The new policy of the Central Bank of Nigeria (CBN) limiting daily cash deposits and withdrawals by individuals to N150,000 and corporate organisations toN1million has sparked controversy among stakeholders in the banking industry.

The circular signed by the director, Currency Operations Department, Mohammad Nda, stated that the new cash lodgements policy would take effect from June 1, 2012, as individuals as well as corporate organisations that make cash transactions above the CBN’s cumulative limit would be made to pay a penal fee of N100, 000 and N200, 000 respectively. Also contravention of the policy, according to the circular, would attract a fine of five times the amount that the bank waives as a first offender, while the bank would subsequently pay 10 times the charges waived.

While some industry players see the new policy as a good initiative to make Nigeria a cashless economy like what is obtainable in advanced economies, others expressed displeasure, stressing that the policy is capable of reducing productivity in the economy as well as revenue generation.

Ade Martins, NUBIFIE president and Sanusi Lamido Sanusi, CBN Governor

The president, National Union of Banks, Insurance and other Financial Institutions Employees (NUBIFIE), Ade Martins Odigie, said that such monetary policy must not be implemented in Nigeria. “Such policy must not be allowed to see the light of day. The current CBN’s management should be called to order. For instance, if you compel an entrepreneur who is transacting a daily business of buying and sell for about N400,000 to limited his cash lodgements and withdrawals to just N150,000, it means his business operations would be reduced by 60 per cent. This is unimaginable and should not be accepted in any form. Aside from the new cash policy, other monetary policies formulated by the current management of CBN should be carefully studied before implementation”, he advised.

He added, “What government should do is to recapitalise the bank of agriculture to enable it operate effectively with a wide network and the capacity to reach every part of the country. Once this is done, it means about 60 per cent of the problems associated with poverty in the country would be solved. Recapitalisation of this bank would allow farmers access to credit facilities to operate on larger scales than what they are doing at present. As such, they would expand their capacity to create more jobs to solve the problem of unemployment in the economy”.

Our investigations revealed that following the CBN’s new policy, third party cheques above N150, 000 would not be eligible for encashment over the counter, but the value for such cheques would be received through the clearinghouse. However, if a bank allows a third party cheque encashment, such bank would face a sanction of 10 per cent of the face value of the cheque. To enhance effective implementation of this policy, the CBN has given operators of card payment schemes, processors, switching companies, service providers, and banks up to June 1, 2011 to acquire approved operational agreements/contracts for local currency point of sale (POS) card scheme, or risk being suspended for a month or even having their licences revoked, should they default in any way.