Faulting CBNÃ¢â‚¬â„¢s Rationale
for Daily Cash Withdrawal Limits.
It is very unfortunate that, without much reflection, the House of Representatives, on Thursday 21st July 2011, reportedly swallowed hook, line and sinker all that the Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, fed it as the rationales for the introduction in Nigeria of Islamic banking and daily cash withdrawal limits. Yet, the House has denied approving Islamic banking and summoned Sanusi to re-appear before it to give further clarifications on same. Although I have my grouse with the introduction of Islamic banking in Nigeria, I leave that for now, and face the daily cash withdrawal limits.
According to the CBN, effective June 1, 2012, the maximum amount of cash withdrawable daily across the counter shall be N150,000 for an individual customer, and N1,000,000 for a corporate customer. Any cash withdrawals above the stated limits shall attract a penalty of N100 per every N1,000 and N200 per every N1,000 for
individual and corporate customers, respectively.
One expected Sanusi to humbly enlighten Nigerians on whatever informed the policy. Sadly, however, he arrogantly and combatively challenged any aggrieved Nigerian(s) to go to court! Such a high horse is unacceptable from a public officer whose office is a public trust. Should a public officer feel justified in deliberately initiating an unpopular policy only to dare aggrieved persons to go to court? Notwithstanding his credentials and awards, Sanusi owes Nigerians a duty to respectfully explain and justify his official pronouncements and CBNÃ¢â‚¬â„¢s policies while he is in charge. He has no right to force his views down our throats; such intellectual arrogance is insulting to the sensibilities of average Nigerians. Let us watch it, for haughty postures by public officers would constitute stumbling blocks to the realization of the spirit of the hard-won Freedom of Information Act.
Among the reasons glibly advanced by the CBN for this policy include reducing the cost of cash management, making the Nigerian economy cashless, checking money
laundering and the insecurity of cash in transit. I intend, in the next paragraphs, to join many Nigerians to fault these rationalisations and condemn
the daily cash withdrawal limits.
First, the elementary role of banks is to take deposits and make same available to depositors on demand, and intermediate between economic sectors having excess
funds and those lacking enough funds by mobilizing funds for the latter. Where a bank fails to pay depositors on demand, it is a sign that it has liquidity problems and calls for the intervention of the regulators. Thus, the obligation of a bank to honour a depositorÃ¢â‚¬â„¢s demand for payment is legally binding, provided the depositor has enough credit balance in his account and the cheque/withdrawal slip is in order.
Again, banks traditionally charge commissions on transactions (COTs) on lodgements into and withdrawals from current accounts. And Nigerian banks have, with CBNÃ¢â‚¬â„¢s
tacit approval, been imposing on their customers similar COTs for withdrawals from savings accounts, Ã¢â‚¬Å“cash handling chargesÃ¢â‚¬Â for withdrawals of N1m and above, and other inexplicable and unjust charges. So, what Ã¢â‚¬Å“cost of cash managementÃ¢â‚¬Â does the CBN refer to? Nigerian banks, arbitrarily and amidst regulatory inertia, do handsomely reward themselves for cash management and Ã¢â‚¬Å“cash handlingÃ¢â‚¬Â. It is even outlandish that a bank whose core duty is to handle cash imposes Ã¢â‚¬Å“cash handling chargesÃ¢â‚¬Â on its customers. But this is Nigeria. Thus, the reason of Ã¢â‚¬Å“cost of cash managementÃ¢â‚¬Â offered by the CBN is not convincing.
The CBNÃ¢â‚¬â„¢s rhetoric of making the Nigerian economy cashless may be melodious. But that is placing the cart before the horse, an undue haste to run without first crawling. What foundations exist in Nigeria for the take-off of a cashless economy? What is the level of literacy and acquaintance with information communication technology (ICT) among Nigerians? How many Nigerians can use electronic banking services? How many Igbo traders, Fulani herdsmen, market women, farmers, etc are knowledgeable in ICT? What infrastructures are there to support electronic banking, assuming most Nigerians are educated and ICT-compliant? Is it enough to flood nooks and crannies with ATMs, with their vulnerability to fraud unresolved?
Why do our public officials waste so much energy, scarce public resources and time theorizing on how an unprepared Nigeria can outstrip the advanced economies overnight? Why do we always transplant policies and programmes from other climes unto an unripe Nigerian environment? Is the World BankÃ¢â‚¬â„¢s approval of the policy enough reason for us to jump on the bandwagon? Tell me, how did Nigeria fare under the Structural Adjustment Programme (SAP) prescribed by the World Bank and IMF?
Very importantly, beyond platitudes, how will the hyped Ã¢â‚¬Å“cashless economyÃ¢â‚¬Â, in real terms, benefit poor Nigerians or transform Nigeria into an El Dorado? Will Nigeria actualize its Vision 20-20-20 and join the league of First World countries by merely operating a Ã¢â‚¬Å“cashless economyÃ¢â‚¬Â? For GodÃ¢â‚¬â„¢s sake, Nigerians are in dire need of basic amenities, and not rhetorics on the vagueÃ¢â‚¬Å“international best practicesÃ¢â‚¬Â.
The issue of reducing the incidence of insecurity of cash in transit sounds good, but is equally unconvincing. Is it not the same CBN which earlier disapproved of banks opening ATM machines outside their branches for security reasons that suddenly did a volte-face on that? What directives has it given to banks on how to ensure security at their ATMs sites? Has the CBN solved the persistent fraudassociated with ATM transactions? Nigerians have been taking care of the security challenges regarding cash in transit, and should be allowed to deposit and withdraw cash as they deem fit.
I consider as very improper the use of regulatory or legislative fiat to limit daily cash withdrawals by bank customers. Whose money are depositors withdrawing? Worse still, it is unpardonable to penalize them for withdrawing above a particular limit. By that, the CBN has given a fillip to our banksÃ¢â‚¬â„¢ predatory charges against which Nigerians have complained on end without any regulatory action. Perhaps, the CBN may soon limit the daily amount to be deposited in banks owing to Ã¢â‚¬Å“cost of cash managementÃ¢â‚¬Â.
I do not see the connection between the amount of cash withdrawn from banks by customers and the incidence of money laundering. As much as I know, much of
money laundering is done electronically through banks. Let somebody tell me how our corrupt politicians transfer looted funds to overseas bank accounts.
It is doubtful that the CBN weighed the implications of this policy before resolving to impose it on Nigerians. People patronize banks to avoid theft and other risks when money is hoarded at home and offices, as happened to the gold coins of the protagonist in George ElliotÃ¢â‚¬â„¢s novel Silas Marner. However, by this new policy, the CBN is throwing many Nigerians back to the ugly practice of hoarding money.
There are so many transactions involving huge sums of money whereof the average Nigerian cannot accept deferred payment, either by cheque or lodgement into his
account. The recurring incidence of dishonoured cheques has made the average Nigerian very suspicious of payment by negotiable instruments. Again, the high
level of illiteracy among Nigerians makes the use of cheques and electronic payments unsuitable in some cases. Tell me, how else does one pay an illiterate Fulani herdsman for cow(s) bought except in cash? How would Nigerians in the rural areas handle cash payments involving huge sums of money? How convenient is it for one to spread his withdrawals in order to meet a transaction whereof time is of the essence? What of the cost of visiting the bank/ATM daily to withdraw N150,000 for such transaction? Why should one be penalized for making a huge withdrawal to attend to oneÃ¢â‚¬â„¢s needs? Depositors withdrawing huge sums should not be forced to incur additional cost by using cash-in-transit (CIT) companies.
I am unable to see any benefits this policy portends for the Nigerian economy and citizenry. If any, they are outweighed by its demerits. The reported plan by some Nigerian banks to lay off bulk tellers Ã¢â‚¬â€œ and boost the unemployment market – may not be unconnected with this condemnable policy. The CBN should rather tackle the recurring incidence of unjust, inexplicable charges and sharp practices for which Nigerian banks are now notorious. It should equally solve the seemingly intractable fraud associated with ATMs and other electronic banking transactions. The government should direct the CBN to urgently retrace its steps and reverse this objectionable policy.
Ikechukwu A. Ogu, a legal practitioner, writes from Central Business District, Abuja (email@example.com