Understanding CBN’s Charge Policy on Deposits

Shortly after the Central Bank of Nigeria, CBN, introduced her new charge policy on deposits, there has been a lot of misgivings about it by Nigerians, generally. A lot of interpretation has also been given regarding the policy and what it entails. It is therefore important to throw a little light on this new policy.

It is not new to the world as so many countries have used it for years now. It is a cashless policy geared towards the promotion of less cash movements in the economy.

Part of the reasons for introducing this policy include, the difficulty in tracing cash frauds, reducing the cost of cash management and also the cost of moving cash. It is a policy that was introduced to encourage Card and Electronic payments for goods and services, as against the traditional cash based transactions we have practiced over the years. It is a scheme that basically promotes electronic banking.

Here is how it works: for individual transactions, any deposit and withdrawal above five hundred thousand Naira will be charged 2% and 3% respectively for the excess. If a customer withdraws six hundred thousand Naira, they will be charged only 3% of the one hundred thousand Naira which is the actual overage of the five hundred thousand Naira limit and not 3% of six hundred thousand as most people fear. For Corporate accounts, however, they are entitled to three million Naira daily withdrawal and deposit charges at 5% and 3% respectively.

It is a good scheme if the purpose for which it was created is achieved. Nigeria will have lesser cash movements and our society will be one with every shop owning a POS or other e-payment channels. Instead of carrying cash around, all one needs to do is to transfer the figure value.

Nigerians, however, have not fully accepted this scheme as their concerns centre on how ready the products of our e-banking system are. Eye brows have also been raised on what guarantee there is, that transactions would not be delayed by alternative channels and majorly, there are suspicions that the policy is just another revenue-motivated drive of the government.

Perhaps it behoves the CBN to see that measures to make this scheme workable are taken in order to see to its successful implementation so that Nigerians will begin to enjoy the full benefits that come with it, just like other countries in western climes. It is a good policy if well managed. Nigeria will do well to join the comity of nations that can hold their own in important sectors like banking. It is about time.