Nationwide Implementation of CBN Cashless Policy.

The Central Bank of Nigeria on Thursday, February 23, 2017 released a circular on the cashless policy, reintroducing cash charges on deposits and withdrawals nationwide. The Cashless Policy which took off as a pilot in Lagos in 2012 and proven to have been successful, was extended to six other States of Kano, Rivers, Anambra, Abia, Ogun and Abuja – the Federal Capital Territory in 2013.

Scope of the new Cashless Policy

The new policy stipulates a cash handling charge on daily cash deposits and/or cash withdrawals that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies.

The table below illustrates applicable rates on deposit and withdrawal amounts in excess of allowable thresholds for individual and corporate accounts:

 

Customer Category Amount Deposits Withdrawals
 

Individual

 

 

 

Less than N500,000 No Charges No Charges
Above N500,000 – N1M 1.50% 2%
Above N1M– N5M 2% 3%
Above N5Million 3% 7.50%
 

Corporate

Less than N3,000,000 No Charges No Charges
Above N3M – N10M 2% 5%
Above N10M – N40M 3% 7.50%
Above N40M 5% 10%

 

Implementation Road Map

The new policy will take effect from April 1, 2017 in the different States of the Federation as advised by the CBN:

 

1-Apr-17 Lagos, Ogun, Kano, Abia, Anambra, Rivers States and the FCT
1-May-17 Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau Sates.
1-Aug-17 Edo, Kastina, Jigawa, Niger, Oyo, Adamawa, Akwa-Ibom, Ebonyi, Taraba and Nasarawa States.
1-Oct-17 Borno, Benue, Ekiti, Cross-River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara States.

 

QUESTIONS AND ANSWERS SECTIONS:

Q – What is Cashless Policy?

A – The cashless policy was introduced by Central Bank of Nigeria (CBN) to regulate cash-based transactions across the economy through Deposit Money Banks. The policy stipulates charges on daily cash deposits or cash withdrawals of any amount above N500,000 for Individuals and N3,000,000 for Corporate accounts. The objective is to reduce the amount of physical cash circulating in the economy and encouraging more electronic-based transactions.

Q – What is new about the CBN Cashless Policy?

A – CBN re-introduced cashless policy charge on cash deposit as well as new band rates for qualified amount. In addition, the new policy will now apply across the 36 States of the Federation including the Federal Capital Territory, although to be implemented in phases.

Q – When is the cashless policy charge taking effect?

A – Nationwide implementation of the policy, as they relate to the charges on deposits and withdrawals, is to commence in phases effectively April 1, 2017.

Q – How would the charges apply across the States of the Federation?

A –

1-Apr-17 Lagos, Ogun, Kano, Abia, Anambra, Rivers States and the FCT

1-May-17 Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau Sates.

1-Aug-17 Edo, Kastina, Jigawa, Niger, Oyo, Adamawa, Akwa-Ibom, Ebonyi, Taraba and Nasarawa States.

1-Oct-17 Borno, Benue, Ekiti, Cross-River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara States.

Q – What is the scope of the new Cashless Policy Charge?

A –

Customer Category Amount Deposits Withdrawals

Individual

Less than N500,000 No Charges No Charges Above N500,000 – N1M 1.50% 2% Above N1M– N5M 2% 3% Above N5Million 3% 7.50%

Corporate Less than N3,000,000 No Charges No Charges N3M – N10M 2% 5% Above N10M – N40M 3% 7.50% Above N40M 5% 10%

Q – Will charges applied on cumulative withdrawal/deposit on all customers’ accounts in the bank?

A – Yes the charges will be applied on the cumulative amount on all customers’ accounts using CIF as the reference. For example, if a customer has four accounts in the bank and withdraws N500,000 each from all the accounts, the system will add up all the amounts and apply charges on the excess amount i.e. (N2,000,000 – N500,000*3% flat). Same thing applies to deposits i.e. (N2, 000,000 – N500,000* 2%flat)

Q – Are the charges applied on the excess of threshold amount or on the total amount?

A – The charges are applied on the excess amount over the threshold.

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