Nigeria’s Central Bank (CBN) has announced plans to penalise commercial banks failing to provide cash at their automated teller machines (ATMs) and branches amid a prolonged cash crunch. Effective December 1, 2024, banks not meeting the directive will face stringent penalties, according to Governor Olayemi Cardoso, who spoke at the annual bankers’ dinner in Lagos.
Spot Checks and Public Reporting
The CBN will conduct spot checks across deposit money banks (DMBs) to monitor compliance and has urged customers to report cash withdrawal difficulties directly to the bank through designated channels. Governor Cardoso also promised extensive public awareness campaigns to distribute the new guidelines.
“Financial institutions found engaging in malpractices or deliberate sabotage will face stringent penalties,” Cardoso warned.
Nigeria’s Persistent Cash Squeeze
The cash scarcity has its roots in the 2023 naira redesign policy, which aimed to promote digital transactions but resulted in significant cash shortages. The central bank’s weekly over-the-counter withdrawal cap of ₦500,000 further aggravated the situation.
While the policy boosted digital payments and benefitted platforms like Opay and PalmPay, it also drove Nigerians to rely on POS agents for cash. These agents often source funds from informal markets like supermarkets and fuel stations, leading to calls for stricter regulation. In May 2024, the government mandated the registration of the country’s 1.9 million POS operators with the Corporate Affairs Commission (CAC).
CBN’s Commitment to Cash Availability
Despite its push for a cashless economy, the CBN has acknowledged the need for sufficient cash circulation, especially during high-demand periods like the festive season.
“The CBN will continue to maintain a robust cash buffer to meet the country’s needs,” Cardoso said. “Our focus is ensuring a seamless cash flow for Nigerians while fostering trust and stability in the financial system.”
Balancing Digital Payments and Cash Accessibility
The dual goals of achieving a cashless economy and addressing immediate cash needs remain a challenge for the CBN. While digital payments have surged, the regulator faces pressure to ensure cash availability at banks and ATMs to ease public frustrations and restore confidence in the financial system.
With penalties for non-compliance now in place, banks will need to step up efforts to provide cash and improve service delivery to avoid regulatory sanctions.