In a move aimed at improving financial inclusion and supporting the growth of Micro, Small, and Medium Enterprises (MSMEs), the Central Bank of Nigeria (CBN) has taken a significant step by removing primary mortgage banks and microfinance banks from its cash withdrawal limit policy.
The apex bank announced this pivotal decision through a circular signed by Musa Jimoh, the Director of Payment System Management at the CBN, which was addressed to all financial institutions across the country.
The circular further highlighted that microfinance banks and mortgage banks, especially those serving the economically active poor, would now be exempted from paying processing fees during cash withdrawals.
According to the CBN’s statement, “The Central Bank of Nigeria hereby directs the exemption of microfinance banks and primary mortgage banks that provide banking services to the economically active poor from paying the processing fee for withdrawals above the cash withdrawal limit for direct cash withdrawals from their correspondent banks. This is to enable them to continue to play their expected role in the economy and provide specialized banking services to their customers.”
The CBN also clarified that microfinance banks and mortgage banks must still adhere to the cash withdrawal limits specified in its previous circular dated 21st December 2022 (BSD/DIR/PUB/LAB/015/073).
This development comes in the wake of the CBN’s initiative to redesign the naira, which included the establishment of cash withdrawal limits for banks and financial institutions. The maximum weekly withdrawal limits for individuals and corporate organizations were set at N500,000.00 and N5,000,000, respectively. Additionally, the policy specified that a processing fee of 3% and 5% would be charged for individual and corporate withdrawals, respectively, under certain circumstances.
The CBN also mandated banks and financial institutions to ensure customers provide their Tax Identification Number, means of identification, and a written note of approval from the MD/CEO of the financial institution authorizing the withdrawal.
The policy, effective from January 9, 2023, aimed to encourage individuals to embrace the CBN’s cashless policy initiative by promoting the use of alternative transaction channels like eNaira, mobile banking apps, USSD, internet banking, cards/POS, etc.
With the exemption of microfinance and mortgage banks from the cash withdrawal limit policy, the CBN is fostering a more inclusive financial system that empowers MSMEs and supports the economically active poor in their pursuit of sustainable growth and financial prosperity.
