ATMs: CBN Reads Riot Act to Banks over Alleged Inhibition of Cash Circulation

*Says financial institutions conniving with PoS operators to frustrate customers

James Emejo in Abuja

The Central Bank of Nigeria (CBN) yesterday read the riot act to banks over activities of their staff which was allegedly hindering the flow of cash in the economy.
The central bank said it had observed that malpractices and desperation to support the profiteering motive of Point of Sale (PoS) operators in connivance with staff of banks – who are in many cases owners of the terminals – were inhibiting efficient circulation of cash.
The warning to banks followed a THISDAY enquiry into allegations that Automated Teller Machines (ATMs) had been without cash amid claims that banks were trading cash with PoS operators.
The CBN further disclosed that it has consistently made cash available to banks based on their request for withdrawals at any of the apex bank’s 37 locations nationwide.

This, the central bank noted, was evidenced by the significant increase in currency-in-circulation between the last quarter of 2023 and end-June 2024.
The CBN further acknowledged that bank officials that own PoS terminals give priority to the operators to support their business.
It added that spot checks had also revealed that PoS operators conducting business around ATMs often times take advantage of stranded customers.
The CBN further disclosed that these operators corner/purchase cash from high cash generating entities including petrol stations and supermarkets at a premium to fund their operations, thereby disrupting flow of cash to banks for processing and redistribution
In response to this development, the central bank said it had issued circulars to direct deposit money banks to immediately put appropriate measures in place to address these observations.

“CBN will not hesitate to apply dissuasive sanctions on erring institutions for failure to comply with any of its regulations or where any of its official is found guilty of sabotaging the system,” the central bank told  THISDAY.
The CBN also directed banks to activate closer monitoring of all agents attached to their institutions and ensure they comply with provisions of the extant guidelines.

This was as the apex banking industry regulatory institution also said it was currently reviewing the guidelines on the operations of agency banking in the country with a view to ensuring agent banking operations are focused in the rural and remote communities to serve the unbanked population, as intended and prescribed, rather than concentrating their operations in the urban centres.
However, this is not the first time the CBN had identified cases of collusion between banks and PoS operators.
In December 2023, the CBN warned Deposit Money Banks (DMBs) and Point-of-Sale (POS) operators against acts that undermine the availability and flow of cash across the country.

The central bank also said it was investigating reported cases capable of defeating the smooth running of the economy.
The bank in a statement issued by acting Director, Corporate Communications, Mrs. Sidi-Ali Hakama, had alluded to alleged cases of collusion between banks PoS operators which had reportedly affected the availability of cash as well as  disruption of the circulation of the Naira.