Central Bank of Nigeria plan to limit cash withdrawals for individuals and businesses.
In an apparent attempt to minimize cash use and curb ransom payments to kidnappers, Nigeria’s central bank has placed limitations on weekly cash withdrawals.
The Central Bank of Nigeria (CBN) said late on Tuesday that under a new policy, weekly cash withdrawals for individuals had been reduced from 2.5 million Nigerian naira ($5,638) to 100,000 naira ($225).
The majority of Nigerians use informal markets where cash is favored and have no bank accounts. The CBN said this action, which aims to increase public access to banking, will go into effect on 9 January 2023.
“The maximum cash withdrawal per week via automated teller machine shall be 100,000 naira subject to a maximum of 20,000 naira ($45) cash withdrawal per day,” it said.
Only notes with a face value of 200 naira or less would be put into ATMs, it said.
The daily limit for businesses has been reduced from three million naira ($6,766) to 500,000 naira ($1,128) each week.
“Withdrawals above these limits shall attract processing fees of five percent and 10 percent, respectively,” the CBN said.
However, it noted, under exceptional circumstances, both individuals and businesses might withdraw up to five million naira ($11,277) and ten million naira ($22,553) every month, respectively.
The new cash restrictions, which the central bank said were in line with its strategy to encourage cashless transactions, came with a warning to commercial lenders not to go above them.
The bank has previously voiced worries about currency counterfeiting, the amount of money that is not inside the banking system, and significant ransom payments to kidnappers and bandits.
Last month, Nigeria launched newly designed currency notes, another move the central bank said would help curb inflation and money laundering.
According to CBN Governor Godwin Emefiele, more than 80% of the 3.2 trillion naira ($7.2 billion) in circulation in Nigeria is not kept in commercial banks’ vaults but rather is in private hands.
When he made the announcement, he said, “The currency redesign will also assist in the fight against corruption as the exercise will rein in the higher denomination used for corruption and the movement of such funds from the banking system could be tracked easily.”
Nigerians have until January 31 to turn in their old notes before they are no longer considered legal cash. The new notes, which come in denominations of 200, 500, and 1,000 naira, go into effect on December 15, 2022.