BY UDEME CLEMENT, 8 APRIL 2012
Commercial banks operating in Lagos State have commenced the implementation of approved processing charges on cash withdrawal limits on individuals and corporate organisations in line with the directive by the Central Bank of Nigeria (CBN), which fixed April 1, 2012 as the takeoff date.
Sunday Business gathered that banks had in the last two months deployed thousands of point of sale (PoS) terminals, Automated Teller Machines (ATMs) and various mobile banking devices to promote alternative modes of payment and reduce emphasis on large volumes of cash transactions in compliance with the new cash policy.
The PoS terminals, according to financial experts, can be deployed even in market places, as some of them do run on battery. "There are also PoS terminals that are so small and can be handheld", according to a manager at First Bank, Isolo branch, along Oshodi-Apapa Expressway.
Sunday Business observed during a visit to some banks in Lagos that transactions went on smoothly as many customers filled forms and collected ATM cards without delay. At Access Bank (formerly Intercontinental) located at Oshodi market, a disagreement ensued between the staff and depositors who waited for over 45 minutes inside the banking hall without deposit slips for transactions.
The CBN had recently increased the limit of cash withdrawals by individuals and corporate organisations from N150, 000 and N1million to N500,000 and N3 million respectively. The monetary authority also put the charges for cash transactions above the limits for individuals at three per cent per N1,000 from the initial N10 per cent and five per cent from 10 per cent for corporate entities.
The apex bank further deferred the take-off date for the new policy in other states, apart from Lagos , till January 1, 2013. CBN also extended implementation of the pilot scheme in Lagos State from March 31 to December 31, 2012, and fixed April 1, 2012, for implementation of the newly approved processing charges by banks in Lagos , stressing that the charges were subject to review every six months.
The apex bank exempted all specialised international institutions like embassies, diplomatic missions, multilateral and aid donor agencies from penalties on withdrawal and deposit limits under the cash-less policy, saying Nigeria is a signatory to several treaties, which exempt institutions from all fees and charges in the host country.
While some financial analysts said the changes by CBN showed flexibility especially for operators of Small and Medium Enterprises (SMEs) who deal with cash transactions on daily basis, others stressed that the monetary authority is making changes in the policy due to wide consultations and discussions with relevant stakeholders in the financial sector. Also the CBN is embarking on massive awareness campaign to educate Nigerians within the urban and rural areas on the need to key into the new concept.
The policy framework/introduction
The new monetary policy that sparked controversy was introduced, last year, by the CBN to make Nigeria a cashless economy like what obtains in advanced economies.
The policy framework, as contained in the circular signed by the director, Currency Operations Department, Mohammad Nda, explained that the new cash lodgement policy was designed to take effect from June 1, 2012, stating that individuals as well as corporate organisations making cash transactions above the CBN's cumulative limit would be made to pay a penal fee of N100, 000 and N200, 000 respectively.
Also contravention of the policy, according to the circular, would attract a fine of five times the amount that the bank waives as a first offender, while the bank would subsequently pay 10 times the charges waived
Criticisms
While some industry players see the new policy as a good initiative to check fraud and money laundering, others expressed displeasure, stressing that the policy is capable of reducing productivity in the economy as well as revenue generation at a time government needs more revenue generation for infrastructural development to enhance economic transformation. Many financial analysts said interconnectivity is a major challenge among mobile phone companies and may work against effective implementation of the new cash policy.
Policy operation
The new policy, without penalties, took off in January in Lagos notwithstanding the position by financial experts who emphasised that cashless economy may not achieve its objectives as over 45 per cent Nigerians still operate in the informal sector of the economy. The options available include the ATM, internet banking, mobile money and the PoS terminals.
A top manager with Zenith Bank explained that PoS terminals can have up to two SIMs with 24-hour back up batteries in case of power failure. Also a manager with United Bank for Africa (UBA) Plc in Lagos said, "We are doing our best to comply with the directive from the apex bank. The reality is that it is long overdue for customers, particularly small depositors, to fully embrace self-service electronic banking services.
For instance, in July, our bank adopted various measures to encourage customers to embrace electronic channels. The bank also introduced a new minimum opening balance of N25, 000. The initiative was to enable customers with less account balance to migrate to either a mobile banking account that is self-serviced through U-Mobile, a suit of electronic and m-banking services offered by the bank or any of the other electronic channels of the bank".
Awareness campaign by CBN
At present, the CBN continues to enlighten the people on the new policy through the mass media. It also signed Service Level Agreements (SLAs) with two mobile phone companies to look into the interconnectivity challenge with a view to ensuring successful implementation of the policy. The CBN set up an industry-wide forum of payment stakeholders to map out strategies on how to check electronic fraud in the system.
Recently the apex bank's deputy governor, operations, Mr. Tunde Lemo, who spoke during an electronic payment conference in Lagos, said, "As we strive to develop the available channels for retail payments, the apex bank is also mindful of the infrastructure and the security challenges posed by this ambitious programme. We have progressed in forging effective partnership with telecommunication companies with the cooperation of the Nigerian Communications Commission while ensuring that structural impediments such as un-interoperability of payments networks of stakeholders are removed."
He added, "We have recently set up an industry wide Nigeria E-Fraud Forum, to serve as an official body to represent the industry on fraud related issues, while enabling a forum for payment stakeholders to collaboratively share data on fraud attempts and proactively tackle these issues with the objective of minimising fraud and limiting losses in the system. The ATM Fraud Prevention Group had also convened and helped the industry in driving down ATM fraud incidences by 99 per cent."
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