Nigerian Cash-less policy will enhance payment system

The cash-less policy will enhance national payments system and address currency management hitches in the country, Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, has said.

Speaking at the fourth memorial lecture of the Clement Isong Foundation titled: “The Nigerian Banking Sector: Reforming Opportunities for Real Sector Growth,” held in Lagos at the weekend, Sanusi explained that the economy is heavily cash-oriented, a trend that increases the operational costs of the banking sector. These costs, he said, are passed down to the customers in the form of high service charges and high lending rates.

Lamido Sanusi CBN Gov

Sanusi who was represented by CBN Deputy Governor, Corporate Services, Suleiman Barau said the operational costs were wholly due to the high cost accrued in cash management, currency sorting, cash movements and frequent printing of currency notes.

He said the direct cost of cash management to the banking industry was estimated to be N192 billion by 2012. “Research has shown that about 90 per cent of bank customer daily withdrawals are of amounts below N150, 000 whereas, only 10 per cent of bank customers who withdraw over N150,000 are responsible for the rise in cost of cash management being incurred by all the bank customers,” he said.

The new cash withdrawal policy, he further explained, is expected to remove the huge cost of managing cash from 90 per cent of the bank customers. He explained that the retail cash policy, which started on April 1, 2012, in Lagos, as a pilot project, stipulates that over the counter cash transactions above N500,000 and N3,000,000 for individuals and corporate, respectively will attract a charge. The implementation is expected to continue in other regions across the country with effect from January 1, 2013.

Sanusi said the enforcement of the Tier Two (T+2) clearing cycle is being stepped up and efforts are ongoing to reduce the cycle to Tier One (T+1) adding that customer can now make payments of up to N10 million through the clearing system with a cheque.

The CBN has also set up a Consumer Protection Department to address user’s complaints concerning issues relating to the banking and payment channels. The banks will also be adopting biometric authentication for POS and ATMs to address safety of customer’s funds and avoid losses through compromise of PIN. “The CBN is committed to a robust grassroots awareness and education campaign strategy to help in the understanding, adoption and usage of POS and ATMs in the nearest future,” he said.

He explained that the policy was designed to promote financial intermediation, financial inclusion
, minimise revenue leakages in the economy.

Sanusi said a major fall-out of the global financial crisis was the need to strengthen regulation and supervision, engage in better risk management practices in financial institutions and restore confidence in the financial system.

According to him, the regulator is committed to enhancing the quality of banks through regulatory framework reform, risk based supervision, consumer protection, corporate governance and disclosure and transparency. It is also working on establishing competitive banking industry structure, improved cost structure of banks through cost control and business process outsourcing, reliable and secure payment systems, greater financial inclusion, improving financial infrastructure, credit bureaus.

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