The World Bank at the weekend in Abuja expressed support for the Central Bank of Nigeria (CBN) to introduce nationwide electronic payment system to help check corruption, save over N10 billion used in printing new notes, and enhance the security of lives and property.
It gave the backing at the launch of a book titled “Achieving Nigeria’s Financial System Strategy 2020: Making Finance Work for Nigeria,” which appraises the country’s readiness to become one of the largest economies in the world by 2020.
Operating a cashless economy in Nigeria, the World Bank argued, will hasten growth in the financial sector, adding that access to finance and ensuring a vibrant market that would create more jobs require a solid and modern financial sector.
The bank lamented moving physical cash around and warned that Nigeria is being left behind as the world progresses towards a cashless society.
It said moving around with cash when e-payment has been embraced across the globe takes Nigeria’s financial sector a step backward.
The CBN recently issued a circular announcing plans to implement a cashless banking policy effective from June 2012 which drew apprehension from the stakeholders and the general public.
A recent report put the value of currency in circulation in February last year at N1.337 trillion, and currency outside bank vaults at N1.025 trillion.
The CBN circular was addressed to banks, money card acquirers, issuers and processors, payment system service providers, and cash-in-transit operators.
It noted that “In view of increasing dominance of cash in the economy with its implication for cost of cash management to the banking industry, security, money laundering, etc., the (CBN), in collaboration with the Bankers Committee, is adopting policies to reduce the high usage of cash, moderate the cost of cash management and encourage the use of electronic payment channels.”
The circular, signed by CBN Director (Currency Operations), Mohammad Nda, said beginning “from June 1, 2012, a daily cumulative limit of N150,000 and N1,000,000 on free cash withdrawals and lodgements by individual and corporate customers respectively with (banks) shall be imposed.”
Individuals and corporate organisations that make cash transactions above the limit “will be charged a penal fee of N100/thousand and N200/thousand respectively for amounts.
“Contravention of this policy shall attract a fine of five times the amount that the bank waives as a first offender, while the bank shall, subsequently, pay 10 times the charges waived.”
Commercial banks are allowed to charge N5 per N1 million as cost of transaction (COT). But there is no CBN approved rate for overdrawn accounts, which is at the discretion of bankers.
The circular added that third party cheques “above N150,000 shall not be eligible for encashment over the counter. Value for such cheques shall be received through the clearing house. If a bank allows 3rd party cheque encashment, it shall be liable to a sanction of 10 per cent of the face value of the cheque or N100,000 whichever is higher.”
The CBN gave operators of card payment schemes, processors, switching companies, service providers, and banks up to June 1, this year to acquire approved operational agreements/contracts for local currency point of sale card scheme, or risk being suspended for a month or even losing their licences.
The CBN was invited to a public hearing by the Senate Committee on Banking and Currency in response, where CBN Governor Lamido Sanusi explained the reasons for the policy and its benefits to the entire economy.
He confirmed that the CBN will implement the policy with adjustments found necessary.
Sanusi appealed for the understanding of all stakeholders and promised that the CBN and banks would do enlightenment campaigns.
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World Bank expresses support for CBN's cashless initiative
World Bank expresses support for CBN's cashless initiative
NigerianEye
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Monday, June 06, 2011
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