Naira Redesign: Banks’ cash withdrawal limit is illegal – Supreme Court

The Supreme Court has adjudged the cash withdrawal limits imposed by banks as a result of scarcity of currency notes in circulation as a violation of citizens’ rights.

A seven-man panel of the court led by John Okoro made the declaration in a unanimous judgement delivered on Friday.

“Such restriction on an owner’s right to freely use his or her property is illegal unless provided for by a law,” Emmanuel Agim, a member of the court’s panel who read the lead judgement, held.

The court handed down the decision in a suit challenging the federal government’s illegal withdrawal of the old N200, N500, and N1,000 from circulation.

The federal government, under a demonetisation policy, had in October 2022, introduced newly redesigned N200, N500, and N1,000 notes and aimed to withdraw the old versions of the currency notes from circulation within 90 days.

Under the policy, the Central Bank of Nigeria (CBN) also placed cash withdrawal limits of maximum of N500,000 weekly on individuals and maximum N5 million weekly on corporate entities.

The implementation of the policy has been chaotic as shortage in supply of the new notes created scarcity of cash across the country.

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Many citizens queued at ATM centres in a chaotic scramble for cash to meet their basic needs but often returned home empty-handed. The situation sparked violent protests by desperate citizens deprived of gaining access to their hard-earned money.

Commercial banks resorted to placing limits on cash withdrawals on their customers in a futile attempt to evenly distribute available cash to the highest number of citizens..

The Supreme Court declared such action by the commercial banks as a violation of the rights of the citizens.

“My attention has not been drawn to any law that permits a bank not to pay cash to a customer on demand on the grounds that the 1st defendant has not been able to print enough new naira notes,” Mr Agim said.

He also said he was not aware of any law “that permits the 1st defendant to direct the imposition of limits on the cash to be paid from a customer’s account after deposit of the old naira notes”.

“To the extent that the directive has continued to deprive all persons and the plaintiffs access to a substantial part of their funds in banks in form of cash, it forcefully and illegally interferes with their rights of ownership and use of their said funds for,” Mr Agim added. “Such restriction on an owner’s right to freely use his or her property is illegal unless provided for by a law.”

The Supreme Court nullified Mr Buhari’s directive withdrawing the old N200, N500, and N1,0000 notes from circulation.

It also ordered that the old naira notes would remain legal tender and must continue to circulate alongside the new ones up till 31 December.