The Central Bank of Nigeria (CBN) yesterday said that there was no going back from the implementation of its earlier released “Industry policy on retail cash collection and lodgment” which imposes restrictions on daily cash deposits and withdrawals either by individuals or corporate entities.
The policy restricts individuals from making deposits and withdrawals above N150, 000 per day and imposes payment of N100 per extra N1000 above the limit just as corporate organizations are restricted from making deposits or withdrawals above N1,000,000 and each extra N1000 will attract N200 with effect from June 1, 2012.
It further hiked the Monetary Policy Rate (MPR) from previous 7.5 to 8 percent, monetary policy stance targeted at checkmating inflationary trend associated with excessive liquidity and pressure on foreign exchange market.
The CBN governor, Mallam Sanusi Lamido Sanusi announced this yesterday while briefing newsmen at the end of the apex bank’s Monetary Policy Committee (MPC) meeting.
He explained that the cash policy limit was part of a comprehensive policy meant to modernize the financial system, adding that the only way to promote cashless economy is to adopt the alternatives including use of ATMs and have regulations that encourage the use of the channels.
He disclosed that it costs the apex bank a minimum of N200 billion per annum to print money, transport it, secure it, destroy it and to process it, stressing that there must be a policy in place to reduce the cost of handling cash as well as check activities of money launderers and corrupt practices perpetuated through use of physical cash.
According to the CBN Governor, “In the banking industry, we did a survey of banks, the top seven banks alone spent almost a N100 Billion in cash management, and it is a major drain on the economy.
“So, what we are going to do is for the next six months, we have what we call “Project cashless Lagos”. We will bring Lagos up as a model, you see the ATM density, we are working with telecommunications companies and you will find that you go to Lagos and do your transactions with cards.
“The people complaining about N150, 000; go to England and America, they use cards, they use internet, they use telephone banking but when they come to Nigeria they want to carry millions of naira in “Ghana-must-go” bags.
“So we’ve got to transform the economy, we’ve also got to put in measures to fight money laundering and corruption and we think this is one of the ways we are contributing towards this process. But we will continue to talk to people, and we will be flexible on the limit, it can be N150, 000, it can be N300, 000; we can talk about the charges.
“The important thing is that in principle, there should be cash limit and we are going to move transactions away from cash to electronic banking. But there will on-going public discussions and we are listening and we will take appropriate measures before the time comes. If we are not ready by June, and we need another few weeks; we will do.”
Mallam Sanusi also disclosed that the MPC resolved to increase the Cash Reserve Requirement from two percent to four percent and the retaining of the symmetric corridor of plus or minus 200 basis points around the MPR.
He noted that inflow into the CBN is not consistent with the high oil prices and advocated for tighter fiscal controls around oil revenues as well as first line charges including JVC deductions and subsidies.
According to the Committee, “A higher rate of retention of oil revenues should facilitate the efforts at maintaining exchange rate stability as an antidote to imported inflation without excessive reliance on monetary tightening measures.”