Customers shun direct foreign cash payment at banks

Investigation by National Daily has shown that customers are still skeptical about making cash deposits into their domiciliary accounts despite the directives by CBN lifting the ban on foreign currency deposits.

Industry analysts said the lack of certainty about whether customers could transfer or do transactions with the deposits was the major factor discouraging foreign currency deposits by customers, stating that the central bank needed to address that.

The CBN had on August, 2015 banned the payment of cash into domiciliary accounts in a bid to stop illicit financial flows in the Nigerian banking system. The apex bank on last week rescinded its decision, saying holders of ordinary domiciliary accounts were now allowed to deposit foreign currencies into their accounts, a move that ended a six-month embargo on the banks from receiving cash deposits from the customers.

A spokesperson of one of the banks, who pleaded anonymity, said, “The directive from the CBN was silent on whether customers can transfer the deposits, and I know there are concerns about that. Possibly, this is one of the things the Bankers’ Committee might want to discuss at its next meeting.

“I am as confused as the rest of the bank customers. I don’t really understand what the central bank is trying to do. A lot of the things they are saying we are not really clear about it. The banking industry is still very confused.”

Mr. Kunle Ezun, currency strategist at Ecobank Nigeria, said, “One would have thought that with that directive, there would be opportunity for business. But basically, I think it has a mooted effect on the banks because it doesn’t create any business; rather, it creates more burdens on the banks.

“When you deposit your dollar cash with the bank and the bank has no outlet for those dollar cash, then you create more problems for them because they will need to pay premium on those deposits. Meanwhile, those deposits are not being utilised. Today, the CBN is not allowing the banks to do wire transfers.”

The CBN needs to come back to the banks and perhaps provide a clearer view about how they will use the deposits, Ezun said.

Ayodeji Ebo, Head of Investment Research, Afrinvest West Africa Limited, said, “It won’t be very effective because they also need to address the user end. What I mean by that is that people are not sure of the modality for withdrawal or usage. Most of the banks have not reversed the initial policy regarding the cap that has been placed on debit and credit cards as well as withdrawals.