Dr. Muda Yusuf, the Director General of the Centre for the Promotion of Private Enterprise (CPPE) has revealed that Monday’s directives by the Central Bank of Nigeria (CBN) to banks suspending processing fees on cash deposits above N500,000 for individual accounts and N3 million for corporate accounts may not be unconnected with the cash scarcity plaguing some parts of the country.
He said CBN is trying to ease the bottlenecks for the supply of cash into the system, and also to encourage people who have cash and want to deposit it to do it easily, without any form of penalty.
“Removing the charge on deposits may encourage more people to deposit their cash. The whole thing is about easing the cash scarcity situation, that’s the whole objective.
He however noted that the CBN should dig deeper into the root cause of the cash scarcity situation.
“I think the CBN should do more, they should investigate properly the exact cause of the cash scarcity situation because it’s bizarre. It’s not like there’s a currency redesign or the CBN is deliberately cutting down on the amount of cash in circulation.
READ ALSO: CBN suspends loans on intervention programmes, mandates banks to recover existing facilities
“Something must have been responsible, and I think the CBN needs to do a lot more in terms of investigating where this is coming from.”
The opinion of a banker who craved anonymity was that the directive was to further enhance customers’ savings.
“From November to December, it’s quite commonplace for fixed deposit rates to increase, and this measure is normally to encourage savings. It’s like this because consumer spending is increased at this period of the year and savings are reduced to their lowest level in the year.
“Now, with the cash scarcity at hand, we have quite an issue on our hands. Increasing fixed deposit rates may not cut it alone, there’s a need for other measures. With the removal of these charges on deposits, I think it should help alleviate the situation as customers are incentivized to deposit money in the bank.”
While the cash scarcity situation is relatively new in Lagos, it has plagued other parts of Nigeria for a longer time.
It remains to be seen what impact the CBN directive will have on the current situation, as ATMs across Nigeria are seen to be drying up of cash.