As Banks Subvert CBN’s Cash Withdrawal Policy
Festus Akanbi writes that the complicity of some officials of money deposit banks in the sabotage of the Central Bank of Nigeria’s Naira Redesign and Cash Withdrawal policy has shown that banks should take the blame for the prevailing naira scarcity and the attendant chaos
As public outrage against the festering scarcity of new naira notes jolts the nation’s economy, banking industry watchers said it is unfortunate that the Central Bank of Nigeria is the agency of government taking the fall for the outright subversion of its policy by money deposit banks.
The apex bank has been at the receiving end since the beginning of the year over the poor handling of the policy on Naira Redesign and Cash Withdrawal policy as banks continue to defy the directives on cash disbursement through on-the-counter withdrawal and the use of their automated teller machines.
There were reports that rather than comply with the CBN’s directives, some bank officials refused to upload new naira notes into their ATMs, while some of them decided to cut down the amount of cash paid out to customers in flagrance with the directives of the apex bank.
The directive on the new cash withdrawal limits was contained in the CBN letter dated December 6, 2022, which was addressed to all Deposit Money Banks and Other Financial Institutions, Payment Service Bank (PSBs), Primary Mortgage Banks (PMBs), and Microfinance Banks (MFBs).
The new policy followed the apex bank’s recent currency redesign project in which it had expressed concerns over the high volume of cash outside the banking system. The affected naira notes were N200, N500, and N1000.
However, despite the open declaration of the CBN that it had disbursed enough cash to banks for onward transmission to bank users, reports have it that many Nigerians could not access cash through banks’ ATMs and the counter.
In response to public outcry over the difficulty in exchanging old naira notes for new ones, the Central Bank decided to move the deadline (for Nigerians to deposit old notes in exchange for new ones) from January 31 to February 10, a deadline that has now been pushed back until February 15, pending the court’s decision in a suit filed by three Northern State governors.
As public complaints grew, the CBN Governor, Mr Godwin Emefiele, directed commercial banks to begin the payment of the redesigned naira notes over the counter. He noted that the new directive would address the challenge of queues experienced at various commercial banks across the country.
The governor said, “while reiterating our commitment to Nigerians to ensure the effective distribution of the newly introduced naira banknotes, we urge them to exercise patience as the CBN is working assiduously to address the challenge of queues at ATMs.”
According to him, in line with this resolve, the commencement of the payment of the redesigned naira notes over the counter is subject to a maximum daily payout limit of N20,000.
The governor also said the bank had observed, with grave concern, the activities of persons selling the newly redesigned banknotes and the queues at Automated Teller Machines (ATMs).
He expressed worry that unregistered persons and non-bank officials had been swapping banknotes for members of the public, purportedly on behalf of the CBN, among others.
Taking the Blame
As Nigerians continued to raise their voices over the difficulty in getting the new notes from banks, analysts said it is unfortunate that the blame for the shoddy arrangement in banks is being laid on the doorsteps of the apex bank, whereas reports so far have indicated that the cash crisis is being orchestrated by some officials of money deposit banks who are said to be engaging in outright hoarding and illegal sale of the currency to PoS operators at a premium.
According to reports, virtually all the banks are neck deep in these illegal activities, which are putting undue pressure on Nigerians in all the regions of the country.
Zulum Read Riot Acts to Banks
For instance, it took a serious threat from the Borno State Governor, Professor Babagana Zulum, last week for banks to come to their senses in the state following the allegation that bank officials were hoarding naira notes from the people.
Unhappy with the fate of the people in the state, the governor directed banks in the state to dispense the new notes via Automated Teller Machines (ATMs) and banking halls or risk losing their lands to the state government.
Zulum gave the warning after visiting branches of banks in Maiduguri, the state capital, to assess problems faced by residents trying to access new naira notes.
“Any bank in Borno State unwilling to ensure their ATMs are fully dispensing new naira notes cash to ease the suffering of our people, we will withdraw their land title immediately. We will only spare Banks with verifiable constraints,” Zulum said.
He added that he was unhappy seeing hundreds of people queuing at a bank branch, with
He said further: “We just released salaries of about N5 billion, and the banks don’t have money; some of the ATMs are not working. We don’t have any problem with the CBN policy or the withdrawal limit, they said individuals could only withdraw N20,000, but why can’t everyone have access to that N20,000?” he queried.
ICPC Arrests Bank Official for Hoarding Naira Notes
Reports showed in the Federal Capital Territory, the Independent Corrupt Practices and Other Related Offences Commission (ICPC) in Nigeria arrested an official of one of the commercial banks for alleged sabotage of the availability of Naira notes. This comes as the anti-corruption agency continues to clamp down on elements frustrating efforts to make the redesigned Naira notes available to Nigerians.
The bank official, who is the Branch Service Head of a bank in the Deidei Branch of Abuja, was taken into custody for her deliberate refusal to upload cash into the branch’s Automated Teller Machines (ATM) even when the money was available, and people were queuing at the ATMs.
A press statement by ICPC spokesperson Mrs. Azuka Ogugua disclosed that when the commission’s monitoring team stormed the bank at about 1:30 pm to ensure compliance and demanded an explanation as to why all the ATMs were not dispensing cash, they were informed by the branch’s Head of Operations that the bank got delivery of the cash not too long ago.
She said ICPC operatives were aware that, the branch took delivery of the cash around 11:58 am and either willfully or maliciously refused to feed the ATMs with the cash.
Bank Manager Arrested in Osogbo
In a related development, the ICPC Compliance Team in Oshogbo has busted an FCMB bank in Osogbo, Osun State, where some ATMs were loaded with cash with their wrappers un-removed, thus preventing the money from being dispensed.
Ogugua said the ICPC Team directed that the wrappers be removed and the cash appropriately loaded.
The Operation Manager of the Bank was arrested and taken in for questioning after a follow-up operation was undertaken and discovered that one of the ATMs was still loaded with the wrappers un-removed.
CBN: Blame Banks for Naira Notes Scarcity
In Ogun State, the CBN said it discovered N4 million of new naira notes hoarded in some commercial banks in the state.
The Deputy Director the banking supervision department, CBN Lagos, Kayode Makinde, said this earlier in the week while monitoring the distribution of the new naira notes.
The CBN senior staffer, who was angry accused commercial banks of sabotaging the efforts of the CBN to make the new naira notes available.
Makinde told the public to blame the commercial banks over the scarcity of the new notes, saying the CBN has done its part.
“This is the third week of ensuring strict implementation of our directive as regards the issuance of new notes. We have banks, agents, and super agents circulate new notes in the economy. The experience has been mixed; we saw some trying to hoard new notes, we compelled them to upload into ATM terminals, and others had poor cash management.
“From our experience, CBN should not be blamed but commercial banks for scarcity. We caught some of them with new notes in their vault, and we compelled them to upload them to their machines. We told them that instead of trying to ration, upload the ones they have and contact your central cash Management unit, which has direct access to CBN, for more.
“We came across instances of sabotage on the part of operators, we will take the case up, and they will be dealt with appropriately.
” We have given a directive that they shouldn’t pay out new notes via the counter, but other notes, some of them did that and ran out of cash. Some branches deployed creative cash management skills and never ran out of cash; others experienced money running out and are still waiting for their source.
“We came across one that couldn’t account for almost four million naira of new notes, and appropriate sanction will be placed on them.”
Analysts believed the embarrassment caused the whole nation was enough for the authorities to punish any of the bank officials that were found guilty of sabotaging the policy, which the apex bank said was in the best interest of the nation’s economy.
