CBN Extends Suspension of Cash Deposit Charges
By Patience Ikpeme
The Central Bank of Nigeria (CBN) has announced the extension of its suspension of charges on cash deposits exceeding certain thresholds, a move aimed at providing relief to Nigerians amidst economic uncertainties.
Effective immediately, the new directive ensures that citizens can continue depositing cash without incurring processing fees until September 30th, 2024.
This decision follows a brief period of confusion initiated on May 1st when banks resumed charging processing fees on cash deposits, complying with the CBN’s “Guide to Charges by Banks, Other Financial Institutions and Non-Bank Financial Institutions” issued in December 2019.
These fees, previously set at 2 percent for individual accounts surpassing N500,000 and 3 percent for corporate accounts exceeding N3,000,000, stirred public concerns.
However, the CBN swiftly intervened, issuing a new circular dated May 6th, 2024, signed by Adetona Adedeji, Director of Banking Supervision, which referred to a previous suspension of these charges implemented in December 2023 and extended it until September 30, 2024.
In the circular stated that “The Central Bank of Nigeria (CBN) hereby extends the suspension of the processing fees of 2% and 3% previously charged on all cash deposits above these thresholds until September 30, 2024.”
The rationale behind the initial suspension and subsequent extension remains undisclosed, prompting speculation within the financial sector. Nonetheless, the move is perceived as potentially alleviating economic pressures amidst recent developments, including the introduction of a 0.5 percent cybersecurity levy on certain electronic transactions.
In addition to addressing concerns about charges, the extension aims to combat cash scarcity, which has been reported across the nation, with some banks still imposing limits on ATM withdrawals. By suspending deposit charges, the CBN hopes to encourage cash deposits, thereby boosting liquidity within the banking system.
Nigeria still grapples with a significant unbanked population reliant on cash transactions. The elimination of deposit charges may incentivize them to utilize formal financial institutions, potentially enhancing financial inclusion.
Moreover, the ease of depositing cash is expected to stimulate economic activity, particularly in rural areas where cash transactions are prevalent. However, the decision has elicited mixed reactions, with some welcoming the relief from additional fees, while others express skepticism about its long-term implications for the cashless policy championed by the CBN.
Financial experts anticipate closely monitoring the impact of this extension on cash flow within the banking system and the overall effectiveness of the cashless policy. The CBN is expected to provide further clarification on its long-term strategy for cash deposit charges in the coming months, as stakeholders await insights into the future direction of banking regulations in Nigeria.
