Following the kick-off of cashless banking in Lagos, the Central Bank of Nigeria(CBN), has exempted microfinance banks natiowide from the policy, BusinessWorld Intelligence can now reveal. To this end, microfinance clients as well as microfinance banks can now continue to deposit and withdraw above the apex bank’s set limit.
The apex bank had earlier pegged cash withdrawal and lodgement limits by individual to N150, 000 and N1 million for corporate bodies, as its implementation commenced in banks within Lagos metropolis earlier in the year. Virtually all banks within the state have started the implementation of the cashless banking policy.
However, investigation shows that microfinance industry in Nigeria fully operate a cash-driven system, such that majority of transactions in the sub-sector are done  through cash movement.
Only few customers embrace electronic banking as the use of ATM points by microfinance clients is very rare. Some, it was learnt, also engage in cheque transactions, but a large proportion rely on naira notes to engage in business dealings. The high illiteracy level in the sub-sector makes it difficult for cashless banking policy to work, with customers unwilling to buy into this initiative.
While customers in most cases deposit more than the said limit, they also withdraw above the stipulated limit, especially at the end of the month, when most small companies had to offset employees’ salaries.
BusinessWorld Intelligence also revealed that 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 benchmark. Although, the banks have option of transferring such withdrawal into the account of withdrawee, which will attract no fine, the illiteracy level of customers in the sub sector serves as a stumbling block.
Considering these challenges as well as opposition from operators, it was learnt that the apex bank deemed it fit to exempt micro banks, believing microfinance industry is not yet ripe for the policy.
Mr Olufemi Babajide, chairman, National Association of Microfinance Banks (Namb), Lagos State chapter, said “microfinance banks nationwide have been exempted from the cashless banking policy so that we can withdraw and deposit beyond the CBN’s limit.  “With the inabiity of customers of MFBs to embrace electronic banking such as ATM transaction and over-dependence on raw cash, he said the implementation of such policy in the market will set the industry aback,” he said.
Babajide however added that the banks are now persuading customers to pay in cheques and do other banking transactions electronically. “We are now appealing to customers to pay with cheques and withdraw from ATM points but the response may not be immediate,” he said.