The Central Bank of Nigeria (CBN) has issued a decisive warning to Deposit Money Banks (DMBs), cautioning them against cash hoarding and diversion as the festive season approaches. The apex bank emphasised that these actions will attract severe penalties, in line with its commitment to ensure efficient cash flow and curb naira abuse.
In a circular dated November 13, 2024, signed by the Acting Director of Currency Operations, Muhammad J. Olayemi, the CBN outlined stringent measures to promote transparent cash disbursement. The apex bank reminded banks of ongoing initiatives such as mystery shopping exercises and spot checks aimed at monitoring compliance. These measures, the CBN noted, are part of efforts to prevent newly minted naira notes from being diverted to unauthorised hawkers.
According to the circular, any bank found complicit in such practices will face financial penalties. Specifically, banks linked to cash seized from hawkers will be fined 10% of the total value of the cash withdrawn from the CBN on the day the offence occurred. For repeat offences, an additional penalty of 5% will be applied for each subsequent breach.
Sanctions and Compliance
The CBN also warned DMBs against engaging in other practices that obstruct efficient cash distribution, such as hoarding or diversion of cash. Violations of the Clean Note Policy, the bank stated, would attract further regulatory sanctions, including fines or other actions to ensure compliance.
In the circular, the CBN reiterated:
– “DMBs to whom cash seized from hawkers is traced will be penalised 10% of the total value of cash withdrawn on the day the seized cash was withdrawn from the Central Bank of Nigeria. Every subsequent offence will incur an incremental penalty of 5%.”
– “DMBs engaging in cash hoarding, diversion, or any action that hinders efficient cash distribution will face sanctions under the Clean Note Policy.”
The CBN’s directive comes amid growing concerns over the availability of cash in ATMs. In recent months, many ATMs across the country have remained empty, leading to frustration among bank customers. Reports indicate that some banks, particularly in the Federal Capital Territory, have begun rationing cash, with daily over-the-counter withdrawal limits set between N5,000 and N20,000.
While DMBs struggle to meet cash demands, Point-of-Sale (PoS) operators have become a crucial alternative, helping customers access cash despite high transaction fees.
To enforce compliance, the CBN announced plans to intensify its monitoring activities in collaboration with law enforcement agencies. Mystery shopping and spot checks will be ramped up to identify erring banks and ensure they are held accountable.
The apex bank urged DMBs to implement robust internal controls to promote transparency in cash disbursement. It also directed banks to prioritise dispensing cash through ATMs to improve accessibility for the public.
Heightened Cash Demand for the Festive Season
With the festive season traditionally driving increased cash demand, the CBN’s measures aim to prevent disruptions in cash flow while addressing public complaints. By holding banks accountable for cash mismanagement, the CBN seeks to restore confidence in the cash distribution system and ensure that Nigerians can access their funds conveniently.
This crackdown underscores the CBN’s broader commitment to maintaining the integrity of the naira and ensuring that cash reaches the public without diversion or misuse.
