The Chairman, Media and Public Affairs Committee (Official Spokesman), Federal House of Representatives, Hon. Benjamin Kalu, has reacted to the Implementation Of Cashless Policy On Deposits by the Central Bank of Nigeria, CBN.
It should be recalled that the CBN had introduced cashless policy on cash deposit, but the House of Reps through Hon. Kalu, revealed reasons why the policy should be suspended.
In an article titled; “NEED TO SUSPEND THE IMPLEMENTATION OF THE CASHLESS POLICY ON DEPOSITS BY THE CENTRAL BANK OF NIGERIA (CBN)”, Kalu said they are aware that the CBN introduced a policy on cash-based transactions but warned that policy on withdrawals has negative impacts on micro, mini, small, and medium enterprises.
The article reads below:
aware that the Central Bank of Nigeria (CBN) introduced a policy on cash-based transactions which imposed a cash handling charge on daily cash withdrawals that exceed N500,000 for individuals and N3,000,000 for corporate bodies in 2012;
furtheraware that the policy on cash-based transactions (withdrawals) in banks, was aimed at reducing and not eliminating the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.);
notes that the cash policy was introduced for a number of key reasons, including the need to drive development and modernization of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020, to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach, inter alia;
notes also that that a variety of benefits are expected to be derived by various stakeholders from an increased utilization of e-payment systems which include:increased convenience, more service options, reduced risk of cash-related crimes, cheaper access to (out-of-branch) banking services, access to credit and financial inclusion for consumers; faster access to capital, reduced revenue leakage and reduced cash handling costs for corporations and increased tax collections, greater financial inclusion, increased economic development for government;
cognizant that the Central Bank of Nigeria has signaled the implementation of a policy which would signal the imposition of charges on deposits in addition to already existing charges on withdrawals;
informed that the charges, which took effect from Wednesday 18th September, 2019 will attract 3% processing fees for withdrawals and 2% per cent processing fees for lodgments of amounts above N500,000 for individual accounts; 5% processing fees for withdrawals and 3% per cent processing fee for lodgments of amounts above N3,000,000 for corporate accounts;
informed again that the charge on deposits would apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers States as well as the Federal Capital Territory; and that the total nationwide implementation of the cashless policy would take effect from March 31, 2020;
worried that the implementation of cashless policy in Nigeria so far, has led to significant decrease in deposit mobilization and credit extension by Nigerian Money Deposit Banks;
deeply worried that the implementation of cashless policy on withdrawals has negative impacts on micro, mini, small, and medium enterprises which are clearly the engine room for growth of the economy and employment generation, thereby throwing many of them out of business and sending more Nigerians into poverty, forcing more traders and micro investors to carry cash about with its attendant security challenges;
aggrieved that while the impact of the cashless policy on withdrawals is still starring us all in our faces as well as other numerous burdensome charges by Nigerian Money Deposit Banks heavily impacting on businesses, the Central Bank of Nigeria deemed it necessary to impose the implementation of cashless policy on deposits, without due consultations with all shades of stakeholder who will be impacted by the policy;
concerned that this overbearing burden aimed at closing down majority of micro, mini, small and medium businesses in Nigeria is also aimed at enriching Nigerian Money Deposit Banks owned by a privileged few, without any known financial contribution to the consolidated revenue fund of the federation;
deeply concerned that the Central Bank of Nigeria did not consider the people as the as prime, important and in deed the centre piece of policy-making, even as Section 14(2)(b) of the Constitution of the Federal Republic of Nigeria, 1999 (As Altered) provides for the security and welfare of the people as the primary purpose of government
- (i) urge the Central Bank of Nigeria to suspend the implementation of the cashless policy on deposits which has taken effect from Wednesday, 18th September, 2019 until appropriate and extensive consultative process is concluded; and
- (ii) mandate the Committee on Banking and Currency to interface with the Central Bank of Nigeria (CBN) to ascertain the propriety, relevance and the actual need for the implementation of that aspect of the cashless policy at this time considering the prevailing economic situation of the country and to report back to the House within 4 weeks.
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