EXPLAINER: How new CBN charges on bank withdrawals, deposits can affect you


On Tuesday, the Central Bank of Nigeria (CBN) announced new charges on cash deposits and withdrawals on individual and corporate bank accounts.

The bank said 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. For corporate bodies, the benchmark is N3 million — 3 per cent for deposit and 5 per cent for withdrawal.

It said the move would encourage Nigerians to handle less cash and instead embrace digital transactions.

The plan is not entirely new. It was first rolled out in 2012 but the charges were only applied to transactions in Lagos.

In 2013, the CBN extended the coverage areas to Abia, Anambra, Kano, Ogun and Rivers States, and Abuja.

In 2014, the bank said it was suspending a proposed nationwide implementation till 2015 to allow for more publicisation and deployment of the required infrastructure.

By April 2017, the bank suspended the policy “untill further notice.”

In its latest announcement on Tuesday, the director, Payments System Management Department at the CBN, Sam Okojere, said the charges will resume in Lagos, Ogun, Kano, Abia, Anambra, Rivers states and the Federal Capital Territory.

A nationwide implementation will start on March 31, 2020.

What this means

The charges do not apply on the first N500,000 for individuals and N3 million for corporate bodies. They will apply on the excess amount.

For instance, if a bank user withdraws N1 million from his individual account, the new policy expects the user to pay N15,000 as a charge — being the 3 per cent on the extra N500,000. If the user lodges the same amount, the charge will be N10,000.

If a business pays N5 million cash into its company account, the charge will be N60,000 — being the 3 per cent of the extra N2 million. If it withdraws the same amount, the charge will be N100,000.

Some Nigerians have hinted at splitting their lodgments or withdrawals to avoid charges. That may not be effective on the same day as the charges apply on single or cumulative daily transactions. Splitting can only work if the subsequent transactions are done on another day.

‘One charge too many’

Many Nigerians have responded with anger, as the charges are only the latest in a list of extra payments customers make to banks and to the government. Last week, the government increased VAT rate from 5 per cent to 7.5 per cent.

Others have questioned the processes before the implementation.

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“Putting aside the merits and demerits (of the cashless policy) for a second. We are no longer in the military era. If, for whatever reason, you are going to introduce charges for deposits, will you just issue a circular?” a former Director-General of the Bureau of Public Service Reforms, Joe Abah, wrote on Twitter.

“You do not just issue a circular introducing charges for depositing money, with no notice, no explanation, no justification and no sensitization. The CBN should show Nigerians some respect,” Mr Abah, who is currently the Nigerian Country Director, DAI International, said.

Dipo Awojide, a public affairs analyst described the policy by the CBN as “confusing”. He said the policy could be implemented without putting an extra burden on Nigerians.

Read also: Minimum Wage: Nigerian workers should be more aggressive — Oshiomhole

“Why do I need to pay an extra 2% when I deposit over N500,000 or pay 3% when I withdraw the same? After paying account maintenance charges monthly, ATM maintenance charge, stamp duty charges and transaction charges when I transfer to other banks? This cashless policy is confusing,” Mr Awojide lamented.

Other Nigerians express divergent views about the policy.

Pepple Tonye, another user, who described the cashless policy as a “sham”, argued that the target is exploitation, considering that the policy has no exceptions.

“If you want to make a transfer and network is bad, you will have to withdraw the same and pay to the beneficiary, depending on how urgent the transaction is and still be charged,” she wrote.

Another user, who goes by the Twitter handle, @Skinethril, said the policy would have far-reaching implications on the minimum wage earners.

“After seeing all these, just ask yourself, what’s the fate of a minimum wage earner? This society has been designed to strangle him and his family, while the lawmakers feed fat off the resources.

“The present crop of leaders are the worst our generation (would) ever see. Next time, vote wisely,” the Twitter user wrote.

‘Cashless is the way’

Some have also expressed support. The lead economist and chairman at Pan Africa Development Corporation, Odilim Enwegbara, said the policy can help curb corruption, money laundering and tax evasion in the country.

“I completely agree with the CBN on a cashless economy,” Mr Enwegbara said in a comment he shared on a WhatsApp group discussion on the issue. “This will make it difficult for corruption and money laundering (to thrive). It will also make it difficult for tax evasion, particularly value-added tax (VAT) that is being withheld by those who collect it on behalf of the government.”

Mr Enwegbara said part of the money realised can be spent on the poor.


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