The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has given reasons for its approval of the new charges on bank withdrawals and deposits by individual and corporate customers.
It would be recalled that the CBN had in a circular on Tuesday, December 17 stated that effective Wednesday, September 18, cash deposits and withdrawals from individual bank accounts would attract additional charges.
In a circular to all deposit money bank (DMBs), the director, payments system management department at the CBN, Mr. Sam Okojere, said 3 per cent processing fees would be paid for withdrawals and 2 per cent for deposits of amounts above N500, 000 for individual accounts.
Similarly, he said corporate accounts will attract 5 per cent processing fees for withdrawals and 3 per cent processing fee for lodgments of amounts above N3 million.
The apex bank further said charges would be in addition to already existing charges on withdrawals and will be aimed at encouraging its cashless policy.
However, Okojere said the charge on deposits “shall apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers states as well as the Federal Capital Territory.”
Addressing the media at the end of the MPC meeting in Abuja yesterday, the CBN governor, Mr. Godwin Emefiele, there was nothing new in the bank charges announced on Tuesday.
Premium Times reports quotes Emefiele as saying that the charge on excess cash deposit above an established threshold has already been in place since July 2012, but was merely suspended in 2014 to allow the full implementation of the cashless policy in the country.
He said the charges were part of its cashless policy introduced in July 2012 to discourage cash transactions and promote the use of electronic payment platforms.
“The charges under the cashless policy in Nigeria is not new. Before it was first launched in 2012, several engagements were held with multiple stakeholders. At inception, charges have always been on deposits and withdrawals.
“It was only suspended in 2014, because we (CBN) felt it was too early to begin to charge those who wanted to deposit money in the banks.
“We agreed that there were lots of cash outside the banking industry, and that there was no need to penalise people who wanted to bring money into the banking industry,” said Emefiele.
After over five years since the charge was suspended (2014-2019), he said the bank deemed it necessary to return all the cash that were kept in peoples’ houses to the banking industry.
“The policy is not designed to de-enfranchise hardworking Nigerians and businesses of their hard-earned money, but to encourage people to patronize online payment platforms,” he added.
Highlighting the benefits of the cashless policy, the CBN governor said small and medium enterprise (SMEs) had embraced the various options and channels available to them for collecting legitimate payment for goods and services.
He said the cashless policy “is in the public interest to promote an efficient payment system which helps to reduce the punitive cost of cash processing often passed on to bank customers by DMBs.
“Cashless policy improves transparency in financial dealings and reduction in crimes, such as advanced fee fraud, graft ransom payments and extortion. That’s why we think Nigerians should proceed in the direction of cashless economy,” he said.
Emefiele also gave justification for MPC’s endorsement of the recent proposal by the federal government to raise the value-added tax (VAT) rate from 5 to 7.5 per cent.
He said the MPC gave its support because it was the best option in the face of the challenge before the government on how to raise funds to meet its responsibilities and obligations to the people.
“The government has a responsibility to fend for the people, by spending money to provide infrastructure – roads, airports, railways and different things that will improve the lives of its people,” he said.
He identified two ways through which the government can fund these expenditures, namely either by raising revenue, or by going for debt through borrowing.
Considering the criticism against government’s debt stock/service ratios, which means the government’s interest rate was too high relative to its revenue Emefiele said government has to find an alternative to fund its business.
“What that means is that the government’s revenue is small. If the government’s revenue is large, then its debt service ratios should be lower. Government will not have any option.
“If we (Nigerians) say the government should not borrow, then the government must be allowed to raise revenue.
“If the government must raise revenue to meet its obligation, it calls for a rationale that what we (MPC) are saying is that it is the right decision that the government has taken to increase VAT from 5 to 7.5 per cent,” the CBN governor said.
Although he acknowledged that the decision was painful, he said Nigerians must understand that government also has an obligation it must meet.
“I will just have to appeal to Nigerians to please try to show understanding. It may seem painful. But if we look at the positive implications on the government’s revenue, debt service ratio is lower, government can meet its obligation to improve roads or provide money for electricity, it will also have a positive implication on the GDP and average growth of the country,” he said.
