Cash Deposit as Lifeline for Nigerians

Nume Ekeghe writes that the suspension of cash deposit fees by the CBN will ease the cash crunch associated with the month of December

As the festive season throws open its doors, Nigerians are gearing up for celebrations and increased financial demands. Therefore, making cash readily available during this period becomes crucial.

Thankfully, the Central Bank of Nigeria (CBN) has stepped in with a timely measure to ease the potential cash crunch typically experienced during December: the suspension of processing fees on cash deposits above N500,000 for individuals and N3 million for corporates.

On Monday this week, a directive to all banks, other financial institutions and non-bank financial institutions stated that this suspension will remain in effect until April 30, 2024.

The decision, announced in a circular signed by the CBN’s Acting Director of Banking Supervision, Adetona Adedeji, comes as a welcome reprieve for Nigerians who have been grappling with the 3 per cent processing fees on deposits and 2 per cent for withdrawals exceeding N500,000, implemented since September 18, 2019.

It stated, “Please recall the processing charges imposed on cash deposits above N500,000 for Individuals and N3,000,000 for Corporates as contained in the “Guide to Charges by Banks, other financial institutions and non bank financial institutions” issued on December 20, 2019, under reference FPR/DIR/GEN/CIR/07/042.

“The Central Bank of Nigeria hereby suspends the charging of processing fees of 2 per cent and 3 per cent previously charged on all cash deposits above these thresholds with immediate effect. This suspension shall remain in effect until April 30, 2024. Consequently, all financial institutions regulated by the CBN should accept all cash deposits from the public without any charges going forward.”

Industry observers averred that the suspension of these fees introduces a much-needed relief, allowing Nigerians to deposit larger amounts without incurring additional charges.

Impact on Informal Sector Businesses

Small businesses operating in the informal sector who are the backbone of the Nigerian economy, often rely heavily on cash transactions. The fee suspension allows them to deposit their earnings without incurring unnecessary charges, improving their cash flow and ability to meet operational expenses during the festive season and beyond.

Also, Bonuses, gifts, or other large cash inflows are common during this period. The suspension of fees empowers individuals receiving such inflows to deposit these funds without facing significant charges. This provides them with greater control over their finances and flexibility in managing their spending during the festive season.

Rural Communities

In rural areas where access to electronic banking services is limited, cash remains the primary mode of financial transaction. The fee suspension ensures that individuals in these communities can access their cash without being penalized, boosting local economic activity and contributing to a more inclusive financial landscape.

Beyond individual benefits, the CBN’s decision has the potential to stimulate economic activity overall. By increasing the flow of cash within the economy, businesses can access the capital they need to operate efficiently, potentially leading to increased production, job creation, and a more vibrant economy.

It is important to note that this suspension is temporary, remaining in effect until April 30, 2024. This timeframe allows the CBN to monitor the impact of this policy on the financial system and adjust its cashless policy accordingly, ensuring a balanced approach that promotes both cashless transactions and financial inclusion.

In conclusion, the CBN’s suspension of processing fees on cash deposits above N500,000 presents a welcome relief for Nigerians this December. This move will ease the potential cash crunch, benefit individuals and businesses alike, and contribute to overall economic growth. While temporary, it demonstrates the CBN’s commitment to supporting financial inclusion and ensuring accessible financial services for all Nigerians, paving the way for a more inclusive and prosperous festive season.