…Orders Banks To Prioritize Cash Disbursement Through ATMs
The Central Bank of Nigeria (CBN) on Friday threatened to sanction any Deposit Money Bank (DMB) found diverting cash to hawkers, as part of its ongoing efforts to ensure responsible currency distribution and adequate liquidity nationwide.
The apex bank, in a circular dated November 13, 2024 and signed by its Acting Director, Currency Operations Department, Muhammad Olayemi, warned that any bank linked to cash seized from hawkers would face a 10% fine on the total value of the withdrawn funds, adding that subsequent violations will attract an incremental penalty of five per cent.
According to the Director, the measures are aimed to curb the abuse of naira notes and promote an efficient cash distribution system.
Olayemi reiterated the CBN’s commitment to enforcing its Clean Note Policy, which seeks to maintain the integrity of the naira by ensuring proper handling and circulation of banknotes.
The apex bank warned DMBs against cash hoarding and diversion, pointing out that such practices undermine access to cash, particularly during high-demand periods like the yuletide season.
It warned that banks engaging in these activities would face sanctions as it will be closely working with law enforcement agencies to intensify spot checks and mystery shopping activities.
The circular reads: “For the avoidance of doubt, it should be noted that: a) DMBs, to whom cash seized from “hawkers” of cash is traced, will be penalized 10 per cent of the total value of cash withdrawn on the day the seized cash was withdrawn from the Central Bank of Nigeria. Every subsequent offense will incur an incremental penalty of 5 per cent.
“b) DMBs found engaging in cash hoarding, diversion, or any actions that hinder efficient cash distribution, including violations of the Clean Note Policy, will incur appropriate sanctions”, it added.
The circular highlighted the need for banks to prioritise the disbursement of cash through Automated Teller Machines (ATMs) to enhance public access and minimise reliance on unauthorised channels.
The apex bank’s directive was sequel to concerns being raised by members of the public, particularly the depositors over the circulation of new naira notes in informal markets, often traced to hawkers who sell cash at a premium, when bank depositors had over the past three weeks been finding it difficult to withdraw cash from their accounts.
As it is usually the case in festive seasons like Christmas and New Year, demand for cash is expected to surge, hence the latest CBN’s directive to the DMBs is seen by analysts as apposite and in the best interest of bank customers and the financial system.
The circular further clarified: “As we approach the yuletide season, with an anticipated increase in cash demand, DMBs are advised to implement internal controls for responsible disbursement and accountability in respect of mint banknotes payouts at their outlets. To enhance public access to cash, we encourage banks to prioritize cash distribution through ATMs.
“During this season, the Bank, in collaboration with relevant law enforcement agencies, will intensify spot checks and mystery shopping activities to monitor and enforce responsible cash distribution and prevent naira abuse”, it added
The Clean Note Policy is directly related to the current regulatory drive of the apex bank as it primarily seeks to reduce the circulation of soiled and unfit banknotes while discouraging unethical practices within the banking sector.
The circular advised banks to strengthen their internal processes and ensure strict compliance with the guidelines for cash disbursement.
