Sunday, 22 September 2019 05:59

Cashless policy: Charges on deposits will derail financial inclusion drive –Analysts

Cashless policy: Charges on deposits will derail financial inclusion drive –Analysts

•Banks fee income to rise, says CardinalStone

As reactions continue to trail the new cashless measures recently announced by the Central Bank of Nigeria (CBN), analysts have said that though the policy is aimed at strengthening the Federal Government’s cashless policy, the move would derailing the financial inclusion drive in the country.


This came as CardinalStone Research have said that the new charges that customers will incur for exceeding deposits and withdrawal limits will further boost banks’ fee and commission income.

The CBN had in a circular to banks last Tuesday, directed that as from September 18, cash deposits and withdrawals from individual bank accounts would attract additional charges.

In explaining the new charges, the Central Bank said that the cashless policy deposit/withdrawal charge is only on the amount in excess of the limit. The daily individual cumulative or single cash withdrawals in excess of N500, 000 would attract a 3 per cent charge, while 2 per cent would be paid on deposits above the amount.

Similarly, corporate accounts will attract five per cent processing fees for withdrawals and  three per cent processing fee for lodgments of amounts above N3 million.


The CBN said the charges would be in addition to already existing charges on withdrawals and will be aimed at encouraging its cashless policy.


The statement, however, said that the charge on deposits shall apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers states as well as the Federal Capital Territory.


The nationwide implementation of the cashless policy will take effect from March 31, 2020, it said.



Commenting on the development in a note issued last Thursday, the CardinalStone Research analysts stated that: “Overall, we see the news as largely positive for banks’ fees and commission income, notably for cash and e-Business related transactions. Although banks already charge fees on withdrawals in excess of the regulatory limits, we believe the introduction of charges on deposits increases scope for additional income.

“First, an induced migration to alternative channels is likely to increase deployment of POS and ATM terminals as well as encourage debit card issuances. This is also likely to lead to increased adoption of banks’ USSD and online platforms by customers. Secondly, customers who fail to migrate will have to pay the required processing fees, which is also likely to be supportive of banks’ fee incomes. BDCs, petrol stations, traders and small businesses who handle a lot of cash are likely to be negatively impacted by the new charges,” they added.

President of the Bank Customers Association of Nigeria (BCAN), Dr ‘Uju Ogbunka, had stated in a chat with Sunday Telegraph last Wednesday that the reintroduction of charges on cash deposits may discourage savings.

He said that while the CBN’s move may help to promote the cashless policy, it could also deter savers.

Ogubunka said: “The move is a two- edged sword. While it is intended to promote the cashless policy, it could also deter savings.  Why should people be charged for saving their money in their bank accounts? Leaving money in banks is helping the business of the banks. So people will not be happy with the new charges on cash deposits.

“Indeed, although the move is intended to reduce the use of cash, it could have the opposite effect as people will prefer to be leaving their cash at home and be spending it gradually instead of taking the cash to the bank and be charged fees for it.”

“If you discourage people from saving, that is not going to help the economy,” the BCAN president said

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