MFBs Fight CBN over Cash Lodgement Limit
- By Abimbola Tooki
- Published July 11th, 2011
- News
- Unrated
The Central Bank of Nigeria(CBN) and microfinance institutions are on a collision course over the planned cash lodgement and withdrawal limit, BusinessWorld Intelligence can now reveal.
The apex bank had earlier pegged cash withdrawal and lodgement limits by individual to N150, 000 and N1 million for corporate bodies, while the implementation is said to commence in June 2012. Individuals will pay a penalty of N100 for every N1, 000 they deposit above the limit while corporate bodies will pay N200 for every N1,000. Investigations showed that this policy is already causing tension in microfinance industry as operators who continue to doubt the workability of this limit, have said the industry is not yet ripe for the directive.
Most of the small business operators argued that they usually deposit their business proceedings with micro finance institutions and hope to use this to offset their employees’ salaries at the end of the month. Investigations, however, revealed that withdrawal and lodgement on daily basis often exceed this limit.
BusinessWorld Intelligence also revealed that marketers, also known as credit canvassers of MFBs, are responsible for every transaction (withdrawal and lodgement) of their customers. All transactions are pulled together and this withdrawal is done en-masse by MFBs through their corresponding banks, which in most cases exceed this limit.
Equally, deposit mobilisation of the big banks in the sub sector exceeds N1 million enchmark. Although, the banks have option of transferring such withdrawal into the account of withdrawee, which will attract no fine, operators said the literacy level of customers in the sub sector is low, as majority of them are yet to embrace electronic banking, such as, the use of Automotive Tellers Machine (ATMs), among others.
And with this policy set to take effect next year, operators said it will not augur well if corresponding banks charge them for exceeding this limit. This, they said, will eat into the little profit they made, thus, restricting impacting negatively, the balance sheet of MFBs.
To this end, the National Association of Microfinance Banks (Namb) is approaching CBN to deliberate on how this policy could either be waved for MFBs or suspended for now until there is enough sensitisation on cashless banking.
Mr. Oladipupo Ajayi, financial secretary, Namb, Lagos chapter, who spoke on behalf of MFBs nationwide said “the association is making steps to make our case known to the apex bank” adding that “we are meeting the CBN to explain to them our stand on the policy and possibly see if we can be exempted from these limits.”
He said though the industry will be happy to abide by the policy, the operating environment does not favour such acceptability. “With the nature of our business and customers, it will be hard to execute,” he said.
The apex bank had earlier pegged cash withdrawal and lodgement limits by individual to N150, 000 and N1 million for corporate bodies, while the implementation is said to commence in June 2012. Individuals will pay a penalty of N100 for every N1, 000 they deposit above the limit while corporate bodies will pay N200 for every N1,000. Investigations showed that this policy is already causing tension in microfinance industry as operators who continue to doubt the workability of this limit, have said the industry is not yet ripe for the directive.
Most of the small business operators argued that they usually deposit their business proceedings with micro finance institutions and hope to use this to offset their employees’ salaries at the end of the month. Investigations, however, revealed that withdrawal and lodgement on daily basis often exceed this limit.
BusinessWorld Intelligence also revealed that marketers, also known as credit canvassers of MFBs, are responsible for every transaction (withdrawal and lodgement) of their customers. All transactions are pulled together and this withdrawal is done en-masse by MFBs through their corresponding banks, which in most cases exceed this limit.
Equally, deposit mobilisation of the big banks in the sub sector exceeds N1 million enchmark. Although, the banks have option of transferring such withdrawal into the account of withdrawee, which will attract no fine, operators said the literacy level of customers in the sub sector is low, as majority of them are yet to embrace electronic banking, such as, the use of Automotive Tellers Machine (ATMs), among others.
And with this policy set to take effect next year, operators said it will not augur well if corresponding banks charge them for exceeding this limit. This, they said, will eat into the little profit they made, thus, restricting impacting negatively, the balance sheet of MFBs.
To this end, the National Association of Microfinance Banks (Namb) is approaching CBN to deliberate on how this policy could either be waved for MFBs or suspended for now until there is enough sensitisation on cashless banking.
Mr. Oladipupo Ajayi, financial secretary, Namb, Lagos chapter, who spoke on behalf of MFBs nationwide said “the association is making steps to make our case known to the apex bank” adding that “we are meeting the CBN to explain to them our stand on the policy and possibly see if we can be exempted from these limits.”
He said though the industry will be happy to abide by the policy, the operating environment does not favour such acceptability. “With the nature of our business and customers, it will be hard to execute,” he said.
