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<p data-beyondwords-marker="c11a3f61-dd2b-478e-8b66-1a3aff91480f">The Central Bank of Nigeria (<a href="https://www.cbn.gov.ng/" target="_blank" rel="noopener noreferrer nofollow">CBN</a>) has announced the suspension of processing fees on substantial cash deposits at financial institutions across the country.</p>
<p data-beyondwords-marker="463b7ccd-b736-477a-95c5-67ca94aa2594">In a circular addressed to all banks, other financial institutions, and non-bank financial institutions, Dr Adetona S. Adedeji, the Acting Director of Banking Supervision at CBN, declared the immediate suspension of charges previously imposed on cash deposits exceeding certain thresholds.</p>
<p data-beyondwords-marker="3a0b0988-e6c6-4cc3-b5e0-e4bd292cb1a2">The memo referenced the “Guide to Charges by Banks, Other Financial Institutions, and Non-Bank Financial Institutions” issued on December 20, 2019, which outlined a 2% processing fee for cash deposits above N500,000 for individuals and a 3% fee for corporate deposits exceeding N3,000,000.</p>
<blockquote class="wp-block-quote" data-beyondwords-marker="fd2516c5-f418-4a34-9a93-4a36c11acb62">
 <p>The Central Bank of Nigeria hereby suspends the charging of processing fees of 2% and 3% previously charged on all cash deposits above these thresholds with immediate effect.</p><cite>The CBN circular says</cite>
</blockquote>
<p data-beyondwords-marker="66cd0992-0218-4f93-99dd-5b94dd6461eb">With immediate effect, the CBN has suspended these processing fees, allowing financial institutions to accept cash deposits from the public without imposing any charges. This directive is set to remain in effect until April 30, 2024.</p>
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 <figure class="aligncenter size-full is-resized" data-beyondwords-marker="13729edc-86e2-400a-9fdc-ff5bb01b454d"><img src="https://technext24.com/wp-content/uploads/2023/12/20231211_155337.jpg" alt="CBN suspends processing fees on deposits of N500,000 and above until 2024" class="wp-image-222993" width="437" height="627">
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<p data-beyondwords-marker="1b05de2f-9098-4355-96ee-e49025c919d5">The directive’s immediate implications suggest potential relief for individuals or entities making large cash deposits, possibly encouraging increased cash inflows into the banking system. However, the long-term consequences of this directive on various sectors of the Nigerian economy raise significant considerations.</p>
<p data-beyondwords-marker="08d7c6bf-514b-4c2a-a853-2a66cf226bc9">Read also: <a href="https://technext24.com/2023/09/06/how-generate-price-verification-report/" rel="noopener noreferrer nofollow">How to obtain FX price verification report for ‘Form M’ request for importers</a></p>
<h4 id="what-cbns-latest-directive-means" data-beyondwords-marker="a787a7b8-9bea-465a-af7b-5f231346211b">What CBN’s latest directive means</h4>
<p data-beyondwords-marker="5e51ff2e-6cb1-4a3b-ac0e-114c03222d13">The Central Bank of Nigeria’s decision to suspend processing fees on significant cash deposits until April 2024 is poised to trigger multifaceted implications across various sectors. Primarily, this directive is expected to impact banking operations, potentially making cash available for Nigerians at automated teller machines.</p>
<p data-beyondwords-marker="d1981809-932d-4a88-8d15-d252bcdd6167">Recently, there has been a public outcry in Nigeria regarding the scarcity of naira notes at public ATMs for withdrawal purposes. While the Central Bank of Nigeria has reassured Nigerians that there is enough cash in circulation in the economy, some analysts believe that the move is to encourage Nigerians to deposit more cash amidst the reported cash scarcity.</p>
<p data-beyondwords-marker="ccf3372e-4721-4dd8-abc0-806951d2fe33">The removal of processing fees could encourage more cash inflows into banks, which could affect liquidity levels, monetary policies, and inflation rates. For example, institutions that deposit large amounts of money may reduce the amount of cash being hoarded, resulting in an increase in the M1 and making banks more liquid. This, in turn, eliminates a potential cash crunch that might resurface during the holidays.</p>
<p data-beyondwords-marker="241ced19-a86c-40db-a203-85d54b627356">Consumer behaviour might undergo shifts as individuals and entities conducting cash-based transactions could lean towards larger cash deposits due to the elimination of fees, potentially affecting spending habits and payment preferences. This may result if, previously, businesses had limited large-sum transactions to be done in cash rather than deposits, to reduce their costs.</p>
<p data-beyondwords-marker="f676b5bb-4af5-432e-a9a0-139473848b40">Businesses that rely on large cash transactions can benefit from reduced transaction costs and save money. This directive may also lead to a review of existing regulatory frameworks related to cash handling and monetary policies in the Nigerian banking sector.</p>
<h4 id="in-summary" data-beyondwords-marker="7b0b36c7-f8f8-4a31-8105-bf2ec3d72578">In summary,</h4>
<p data-beyondwords-marker="a96626b5-1aa2-4fae-aa82-a7ffb364c02a">The directive would help to eliminate an uprising that Nigerians have been witnessing recently, having to meet empty ATMs and unavailable cash to facilitate their daily transactions, consequently leading to slowing demands in the holiday seasons.</p>
<p data-beyondwords-marker="7be4d30b-5ec5-4c4a-8db4-f50b0d49c1f2">Businesses would also be impacted as the erstwhile limitation of having to incur extra costs for large-sum deposits is eliminated. This could potentially cause liquidity to rise and give the nation’s currency the strength it needs in the foreign exchange market.</p>

CBN suspends processing fees on cash deposits above N500,000 and what it means

Technext.ng

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