Apparently responding to public outcry over the daily ceiling on cash withdrawals and depo-sits, the Central Bank of Nigeria (CBN) at the weekend said it had raised the limits. The banking sector regulator has increased the daily cumulative cash withdrawal/ deposit limit for individual accounts from the previously announced N150,000 per day to N500,000.
Similarly, the limit for corporate accounts has also been raised to N3 million per day, from the N1 million earlier announced. Deputy Governor, Operations, CBN, Mr. Tunde Lemo, disclosed this in an interview with THISDAY on the sidelines of the 1st annual Lagos Business Conference organised by the Leeds Bryan International Limited. Lemo explained that the applicable charges, which would become effective from April 1, had also been adjusted. “If it is withdrawal, for individuals it will be three per cent above the N500,000 threshold and for corporate bodies, it will be five per cent above the N3 million threshold.
And for cash deposit, it would be two per cent if an individual is depositing above N500,000 and three per cent if corporate bodies are depositing above N3 million,” he said. The previous charges were between 10 and 20 per cent. According to him, the CBN would commence “aggressive” campaign on the policy in Lagos from today through newspapers and television advertisements, as well as radio jingles in English, Pidgin English and vernacular. These adverts, he said, would be targeted at the market women. As part of efforts to reduce the dominance of cash in the economy, the CBN, had in a circular last year, pegged the cash withdrawal/deposit limits for both individual and corporate accounts in an experiment. The circular titled: “Industry Policy on Retail Cash Collection and Lodgement” had also prescribed penal charges for individuals and corporate organisations that flout the limits.
The pilot phase of the policy commenced in Lagos last January and is expected to be extended to the Abuja, Port Harcourt, Kano and Aba by June. Lemo decried the absence of a unique national identity system in the country. He said: “Part of what we are doing with electronic banking is also to eliminate corruption, terrorism. In Kenya, an average Kenyan is identified. There is a national identification for everybody, which is linked to your bank account and every other thing, including your international passport. But in Nigeria, that doesn’t exist yet, that is why you can rob Peter to pay Paul.
You can dupe one bank today and reappear in another area under another name and then life continues.” “But what we intend to do with the Nigerian Identity Management System (NIMS) is that we will have every Nigerian registered with a unique identification that will be linked to your bank account, your voter card and every other thing you do, such that there will be a robust data bank that every bank can use. And when that happens, the benefit is that you will have a credit history. You can go to any bank and request for loan and at the press of the button, all the details of your commercial transactions will be screened and so the bank can take an informed decision on whether you are credit worthy or not.
And that is what is used to unleash the opportunity in consumer credit all around the world.” He further stated: “Nigeria is a cash economy and not a credit economy, because there is no robust data bank that tracks commercial transactions and these are the things that the NIMS will do. With these, we would then be able to aggressively role out mobile banking and then banks will be able to reach out virtually to every Nigerian.” “Banks all over the world today don’t open branches the way Nigerian banks do. They have since left what we call brick and mortar and are into what we call agency banking. With your laptop, mobile phones, iPad and in the next few years, with the mobile phone revolution, we shall have smart phones, which will even make life much easier for everybody, such that the bulk of transactions can be done on your smart phone.”
Meanwhile, inflationary threats which heightened in January owing to the partial petrol subsidy removal would be the focus of CBN Monetary Policy Committee (MPC) which commences its two-day meeting today. THISDAY gathered that although the benchmark interest rate and other tools may be left unchanged, a major outcome of the meeting would be for the apex bank to increase its restrictive monetary policy stance, through the use of Open Market Operations (OMO). Through the OMO, the apex bank had been auctioning treasury bills bi-monthly, in its attempt to reduce the volume of money supply in the economy. The Composite Consumer Price Index (CPI) – the basket used in measuring inflation by the National Bureau of Statistics (NBS) – had climbed sharply to 12.6 per cent in January from 10.3 per cent last December. The CBN had, however, indicated that it would not react to increases in inflation that emanated from fuel subsidy reforms by adjusting the Monetary Policy Rate (MPR) and other monetary policy tools.
This NBS is expected to release the inflation figures for February today. Managing Director, Financial Derivative Company Limited (FDC), Mr. Bismarck Rewane, predicted in a report at the weekend, that the CPI for February would climb to about 13.5 per cent. But analysts at FSDH Security Limited predicted that the February inflation rate would moderate slightly to 12.40 per cent. Financial market experts also forecast that the MPR, the Cash Reserves Requirements (CRR), and other tools would be left unchanged at the end of the meeting. For instance, Emerging Markets Strategist, Standard Bank Plc, Samir Gadio, forecast that the committee would keep the MPR and other monetary policy instruments unchanged. Gadio explained: “We seem to be entering a cycle of policy rate stability after the CBN left the MPR unchanged at its November 21, 2011 and January 30th-31st 2012 MPCs and following a period of continued sharp monetary tightening. Market rates remain significantly attractive. “The CBN probably feels that the policy rate has reached equilibrium and that further hikes will add little to its price stability mandate while they would most likely be controversial as average lending rates would subsequently continue to edge up.”
Gadio also pointed out that the CBN does not really need to raise the MPR since OMO rates are at a much higher level and represent a tool that could be used to manage (the still tight) monetary conditions. Similarly, Regional Head of Research, Africa, Global Research, Standard Chartered Bank, Razia Khan, predicted that the MPC would keep MPR at 12 per cent at the end of the meeting, despite the surge in inflation. She however argued that year-on-year inflation would continue to climb “modestly in the coming months”. According to Khan: “Real interest rates are still positive, and the naira has appreciated on the interbank market, reflecting in part an increase in demand for FGN bonds from offshore investors, as well as a softening in forex demand domestically, most likely due to moderation in economic activity.”