The Central Bank of Nigeria (CBN) has announced plans to penalize commercial banks that fail to provide cash to customers at automated teller machines (ATMs) and bank branches. This move, effective December 1, 2024, is aimed at addressing the ongoing cash scarcity that has impacted Nigerians since 2023.
CBN Governor Olayemi Cardoso disclosed this during the annual bankers’ dinner in Lagos, emphasizing the bank’s commitment to ensuring compliance across the financial sector. He urged Nigerians to report cash withdrawal difficulties to the CBN through official channels, adding that the apex bank would widely circulate reporting guidelines to enhance public awareness.
“We are conducting spot checks across deposit money banks and will impose penalties on institutions failing to meet cash availability requirements. Financial institutions found engaging in malpractices or deliberate sabotage will face stringent sanctions,” Cardoso stated.
Addressing Cash Shortages and Promoting Digital Transactions
Cardoso also called on stakeholders, including mobile money operators and agents, to comply with regulations to improve service delivery and promote digital payment systems. Despite efforts to transition to a cashless economy, Nigeria’s reliance on physical cash persists.
The country’s cash scarcity intensified in 2023 following the controversial naira redesign policy, which aimed to curb inflation and reduce reliance on cash. While the policy spurred growth in digital payment platforms like Opay and Palmpay, it also exacerbated cash shortages at ATMs and banking halls.
Adding to the issue was a central bank directive capping weekly over-the-counter cash withdrawals at ₦500,000, forcing many businesses and individuals to turn to Point-of-Sale (POS) operators. These agents, often sourcing cash from unconventional outlets like supermarkets and fuel stations, have become critical players in the economy.
The rise of POS agents, however, has sparked calls for regulation. In May 2024, the Nigerian government mandated the country’s 1.9 million POS operators to register with the Corporate Affairs Commission (CAC), a move aimed at formalizing the sector and curbing malpractice.
Ensuring Cash Availability
Despite the push for digital transactions, the CBN acknowledged the need to ensure adequate cash flow, particularly during high-demand periods like the festive season.
“The CBN will continue to maintain a robust cash buffer to meet the country’s needs. Our focus is on ensuring seamless cash flow while fostering trust and stability in the financial system,” Cardoso said.
As the December 1 deadline approaches, the CBN’s enforcement of penalties is expected to put pressure on banks to address cash shortages and restore public confidence in the financial system.
