…Beams searchlight on defaulting banks
…To crack down on Illegal cash sales
By Charles Ebi
Central Bank of Nigeria has imposed a sanction of N1.35bn on nine deposit money banks in Nigeria for failing to dispense cash through their automated teller machines during the yuletide. The move is a clear message of zero tolerance for cash flow disruptions.
The nine banks, according to the apex bank, were found culpable for failing to make Naira notes available through automated teller machines during the yuletide season
The affected banks include Fidelity Bank Plc, First Bank Plc, Keystone Bank Plc, Union Bank Plc, and Globus Bank Plc. Providus Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, and Sterling Bank Plc.
Each bank was fined N150m for non-compliance, in line with the CBN’s cash distribution guidelines, following spot checks on their branches The enforcement action follows repeated warnings from the CBN to financial institutions to guarantee seamless cash availability, particularly during periods of high demand
Communication with the banks revealed that the fines would be debited directly from their accounts with the apex bank
The Acting Director of Corporate Communications at the CBN, Mrs. Hakama Sidi Ali, confirmed the development.
She noted that ensuring seamless cash flow is vital for maintaining trust and financial system stability.
According to her, the apex bank would impose further sanctions on any financial institution found hoarding cash in the banking system.
She said, “Each bank was fined N150m for non-compliance, in line with the CBN’s cash distribution guidelines, following spot checks on their branches.
“The enforcement action follows repeated warnings from the CBN to financial institutions to guarantee seamless cash availability, particularly during periods of high demand
“The affected banks include Fidelity Bank Pic, First Bank Plc, Keystone Bank Pic, Union Bank Pic, and Globus Bank Plc. Providus Bank Pic, Zenith Bank Pic, United Bank for Africa Pic, and Sterling Bank Plc.
“Communication with the banks revealed that the fines would be debited directly from their accounts with the apex bank
“Ensuring seamless cash flow is paramount to maintaining public trust and economic stability.
“The CBN will not hesitate to impose further sanctions on any institution found violating its cash circulation guidelines”.
The CBN said, its investigations and monitoring will continue to scrutinise cash hoarding and rationing, both at bank branches and by point-of-sale ,POS, operators.
The apex bank said it is working with security agencies to crack down on illegal cash sales and operational violations, including enforcing POS operators’ daily cumulative withdrawal limit of N1.2m.
The CBN Governor, Olayemi Cardoso, had in his address at the Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria ,CIBN, in November 2024 warned banks to strictly adhere to cash distribution policies or face severe penalties.
He underscored the CBN’s commitment to maintaining a robust cash buffer to meet Nigerians’ needs.
“Our focus remains on fostering trust and ensuring stability. and guaranteeing seamless cash circulation across the financial system”, Cardoso said.
The CBN urged all financial institutions to comply with its guidelines. warning that further violations would attract swift and decisive sanctions.
A resurgence of widespread and intense cash rationing by banks had compounded the severe economic challenges confronting Nigerians, driven by high prices of goods and services.
Investigations had revealed that during the yuletide, banks imposed cash withdrawal limits ranging from N5,000 to N10,000 in most bank branches for over-the-counter and automated teller machine transactions.
Bank customers had narrated bitter experiences in withdrawing cash from the banks.
The House of Representatives had criticized the Central Bank for the lingering cash scarcity that constrained the citizenry from accessing their basic needs.
It directed the apex bank to urgently address the festering cash squeeze if it was not responsible for the shortage.
The directive followed a motion by Uguru Emmanuel highlighting the economic and social implications of the cash scarcity that had left many Nigerians unable to access cash for their basic purchases.
The House had further directed its committee on banking regulations to investigate the cash crunch in commercial banks and report back within one week.
The intervention of the House of Representatives brought back the sad memories of the naira redesign and cash swap policy of the last administration.
The CBN, towards the last quarter of Buhari’s regime, announced the redesign of the N200, N500, and N1,000 notes with January 31, 2023, as the deadline for the eventual phase-out of the old notes.
It followed the policy up with a gradual withdrawal of the old notes to replace them with the new ones.
Soon after, the apex bank enthusiastically announced it had withdrawn N1.9tn worth of currency outside the banking system within two months of its naira redesign and cash swap policy.
Through that intervention, CBN said it had reduced the currency outside the banking system to N900bb from a whopping N2.7tn before the new policy came into effect.
The bank sold the new policy to Nigerians with a promise that it would combat counterfeiting, improve the effectiveness of monetary policy tools on inflation and mop up excess liquidity.
But what followed was a shortage of the national currency. Neither the old naira notes nor the new ones were available to Nigerians as acute scarcity set in.
