THE nation’s banks have begun the implementation of the Central Bank of Nigeria (CBN)’s policy to promote a cashless economy ahead of the deadline for its take-off next year.
The CBN in May proposed limits of N150,000 and N1 million on cash withdrawal and deposit for individuals and corporate bodies in that order. It also proposed charges of N100 on every N1,000 for individuals and N200 on every N1,000 for corporate bodies for cash transactions above the limits.
The proposed date for the starting of the policy is June 1, 2012, while a pilot scheme is slated to begin in Lagos in January 1, 2012.
The apex bank had said that the policy would help reduce the rampant use of cash in the country, thereby facilitating a cashless economy.
An investigation by The Guardian shows that one of the banks has started charging one per cent cumulative daily deposits/ withdrawal above N1 million on all savings accounts. This policy started on July 1, 2011.
The same bank also spelt out the denominations in which customers will be paid, depending on the amount. For instance, a customer that wishes to withdraw N20,000 and below, will be paid in N100 denomination, while a customer that wishes to withdraw N10,000 and below will be paid in N100 and N50 notes.
Similarly, any customer that wishes to withdraw N30,000 and above, will be paid in N500 notes and others, while a customer that wishes to be paid in N1,000 bills, will have to make use of an Automated Teller Machine (ATM).
An official of the bank told The Guardian that the company wanted to discourage customers from carrying around large amounts of cash. According to him, most of the customers that want to withdraw large amounts of cash always insist on being paid in large denominations such as N1,000 notes in order to make bundles compact.
On the one per cent charge on every deposit/withdrawal of N1 million and above, he noted that it was for the same reason, adding that besides being part of service charge, it would force customers to have a rethink on the possibility of withdrawing or depositing such large sums in one fell swoop.
Similarly, United Bank for Africa (UBA) Plc last week introduced a new product known as U-Mo aimed at decongesting its banking halls, improving service delivery, as well as deepening the cashless economy policy of the CBN.
According to the bank, following its introduction of a minimum account balance of N25,000, customers whose account balances are below the minimum threshold and are not able to upgrade between July 1 and September 1, 2011 have the option of migrating to self-service channels provided by the bank.
The migration of customers to self-service e-banking channels and mobile payment platform, U-Mo, is being done through the various business offices of UBA where the respective accounts are domiciled. These platforms provide customers much more convenience and access compared to brick and mortar-based services, the bank had explained.
Commenting on the increase in the minimum balance, Kennedy Uzoka, Executive Director, Resources, UBA, said the initiative was based on management’s continuous efforts to improve on customer service delivery in the bank. “This decision is motivated by our desire to serve our customers better. We want to significantly improve customer service and optimise our resources,” he said. In the implementation of this new initiative, the bank is not unmindful of some of the inconveniences it would cause.
According to him, “cheques drawn on all current accounts which will cause them to go below the N25,000 minimum balance will be honoured and an auto-alert generated and sent to the affected customer’s mobile phone and email…”
The CBN last week explained the rationale behind the new policy. According to the apex bank’s Deputy Governor, Operations, Tunde Lemo, in the wake of the 2009 reforms, data analysis of the commercial banks showed a high cost structure in the banking industry, of which a significant proportion was passed on to the customers in the form of high service charges and high lending rates. Also, a substantial part of the operational costs is the expenditure on cash management.
He explained that the Nigerian economy was too heavily cash-oriented in the transactions of goods and services. The huge volumes of cash transactions impose tremendous costs on the banking sector and, consequently, the customer, in terms of cash management, frequent printing of currency notes, currency sorting and cash movements.
He added that this informed the preference by the banks to lend to the capital market and oil and gas industry rather than the real sector and small and medium scale enterprises.
Click to signup for FREE news updates, latest information and hottest gists everydayThe CBN in May proposed limits of N150,000 and N1 million on cash withdrawal and deposit for individuals and corporate bodies in that order. It also proposed charges of N100 on every N1,000 for individuals and N200 on every N1,000 for corporate bodies for cash transactions above the limits.
The proposed date for the starting of the policy is June 1, 2012, while a pilot scheme is slated to begin in Lagos in January 1, 2012.
The apex bank had said that the policy would help reduce the rampant use of cash in the country, thereby facilitating a cashless economy.
An investigation by The Guardian shows that one of the banks has started charging one per cent cumulative daily deposits/ withdrawal above N1 million on all savings accounts. This policy started on July 1, 2011.
The same bank also spelt out the denominations in which customers will be paid, depending on the amount. For instance, a customer that wishes to withdraw N20,000 and below, will be paid in N100 denomination, while a customer that wishes to withdraw N10,000 and below will be paid in N100 and N50 notes.
Similarly, any customer that wishes to withdraw N30,000 and above, will be paid in N500 notes and others, while a customer that wishes to be paid in N1,000 bills, will have to make use of an Automated Teller Machine (ATM).
An official of the bank told The Guardian that the company wanted to discourage customers from carrying around large amounts of cash. According to him, most of the customers that want to withdraw large amounts of cash always insist on being paid in large denominations such as N1,000 notes in order to make bundles compact.
On the one per cent charge on every deposit/withdrawal of N1 million and above, he noted that it was for the same reason, adding that besides being part of service charge, it would force customers to have a rethink on the possibility of withdrawing or depositing such large sums in one fell swoop.
Similarly, United Bank for Africa (UBA) Plc last week introduced a new product known as U-Mo aimed at decongesting its banking halls, improving service delivery, as well as deepening the cashless economy policy of the CBN.
According to the bank, following its introduction of a minimum account balance of N25,000, customers whose account balances are below the minimum threshold and are not able to upgrade between July 1 and September 1, 2011 have the option of migrating to self-service channels provided by the bank.
The migration of customers to self-service e-banking channels and mobile payment platform, U-Mo, is being done through the various business offices of UBA where the respective accounts are domiciled. These platforms provide customers much more convenience and access compared to brick and mortar-based services, the bank had explained.
Commenting on the increase in the minimum balance, Kennedy Uzoka, Executive Director, Resources, UBA, said the initiative was based on management’s continuous efforts to improve on customer service delivery in the bank. “This decision is motivated by our desire to serve our customers better. We want to significantly improve customer service and optimise our resources,” he said. In the implementation of this new initiative, the bank is not unmindful of some of the inconveniences it would cause.
According to him, “cheques drawn on all current accounts which will cause them to go below the N25,000 minimum balance will be honoured and an auto-alert generated and sent to the affected customer’s mobile phone and email…”
The CBN last week explained the rationale behind the new policy. According to the apex bank’s Deputy Governor, Operations, Tunde Lemo, in the wake of the 2009 reforms, data analysis of the commercial banks showed a high cost structure in the banking industry, of which a significant proportion was passed on to the customers in the form of high service charges and high lending rates. Also, a substantial part of the operational costs is the expenditure on cash management.
He explained that the Nigerian economy was too heavily cash-oriented in the transactions of goods and services. The huge volumes of cash transactions impose tremendous costs on the banking sector and, consequently, the customer, in terms of cash management, frequent printing of currency notes, currency sorting and cash movements.
He added that this informed the preference by the banks to lend to the capital market and oil and gas industry rather than the real sector and small and medium scale enterprises.
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