Nigerians have described the imposition of fines on nine banks by the Central Bank of Nigeria (CBN) for their inability to load their Automated Teller Machines (ATMs) with cash during the festive season as a right step in the right direction.
The CBN last week landed the big hammer on nine deposit money banks (DMBs) for making their customers go through an agonizing experience during the festive season by not loading their ATMs.
The total fine on the nine banks is N23.5 billion.
While briefing stakeholders at the annual bankers’ dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in November 2024, Olayemi Cardoso, CBN governor, among others, warned banks against making cash unavailable to Nigerians during the festive period and also stressed the need for strict adherence to cash distribution policies.
He said: “We also recognize the ongoing challenges with cash availability at ATMs, which disproportionately affect ordinary Nigerians. To address this, we are conducting spot checks across Deposit Money Banks (DMBs) and will impose penalties on underperforming institutions.
“Effective December 1, 2024, customers are encouraged to report any difficulties withdrawing cash from bank branches or ATMs directly to the CBN through designated phone numbers and email addresses for their respective states.
“Guidelines will be distributed widely to raise public awareness. We also urge full regulatory compliance by all stakeholders, including Mobile Money Operators and PoS Agents, to promote digital transaction channels and improve service delivery. I repeat financial institutions found engaging in malpractices or deliberate sabotage will face stringent penalties.
“The CBN will continue to maintain a robust cash buffer to meet the country’s needs, particularly during high-demand periods such as the festive season and year-end. Our focus is on ensuring a seamless cash flow for Nigerians while fostering trust and stability in the financial system”.
Despite the warning, nine banks were on Tuesday last week fined N150 million each after the CBN had carried out spot checks across branches to enforce compliance with its cash distribution guidelines.
The sanctions targeted the following nine banks for failing to ensure the availability of Naira notes via ATMs during the yuletide season.
The affected banks include: Fidelity Bank Plc, First Bank Plc, Keystone Bank Plc, Union Bank Plc, Globus Bank Plc, Providus Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, and Sterling Bank Plc.
Hakama Sidi Ali, CBN’s acting director of corporate communications, signed a statement, saying, “The CBN will not hesitate to impose further sanctions on any institution found violating its cash circulation guidelines.”
The apex bank’s investigations and monitoring efforts will continue to scrutinise cash hoarding and rationing practices at bank branches and by Point-of-Sale (POS) operators, she said.
Additionally, the CBN is collaborating with security agencies to address illegal cash sales and ensure compliance with operational regulations, including enforcing the POS operators’ daily cumulative withdrawal limit of N1.2 million.
According to stakeholders, who spoke to Daily Independent, the enforcement action reveals the CBN’s determination to ensure seamless cash availability, especially during peak demand periods.
Banks react
An investigation by Daily Independent revealed that the affected banks have reacted positively to the CBN’s punishment by ensuring that their ATMs are loaded with cash.
A visit to several bank branches in Lagos, Ibadan and Abeokuta revealed that most ATMs were dispensing cash.
ATMs at United Bank for Africa (UBA), Zenith Bank, and Fidelity Bank were operational, while those at First Bank of Nigeria were not dispensing cash.
However, customer turnout at the ATMs was low, with no customers observed at the ATMs of Zenith, Fidelity and First Bank.
At the UBA branch, some customers were seen withdrawing cash. A security staff at a Fidelity Bank branch explained that withdrawals were limited to N20,000 for Fidelity Bank debit cardholders and N10,000 for holders of other banks’ ATM cards.
“I have been able to withdraw money from my Zenith Bank account today. I could not do so in December as there was no cash,” Ayo Dennis, a Zenith Bank customer, told our correspondent in the Isolo area of Lagos.
Similarly, a customer at UBA in Victoria Island, Lagos, confirmed that he was able to withdraw N20,000 from a UBA ATM on Wednesday.
A new CBN
Those who spoke to Daily Independent about the CBN’s decision to sanction the nine banks, said it perhaps the first time they are seeing the apex bank putting actions to their words.
Timothy Adiele, a retired banker, told Daily Independent that the CBN, in the last decades, have not been coming out publicly to punish banks whenever they erred.
He said: “I was shocked when I read that the CBN has placed a fine of N150 million each on these banks for failure to adhere to the directive of the apex bank of making cash available at ATMs. This is encouraging and the CBN, and its leadership, should keep it up”.
In his own opinion, Stephen Iloba, an economist, said his happiness is not the fines imposed on these banks but the bravery of the CBN in making the decision.
“I want to look beyond the fines. My happiness is that the CBN said it will punish any bank that violated the directive and they did. I think this is commendable”, Iloba said.
Other 2025 targets
To further enhance confidence in the payment system, Cardoso said the Payment System Vision 2025 initiative will drive initiatives to encourage quick and affordable cross-border payments, a critical step toward unlocking trade, investment, and economic growth.
“Additionally, the e-Naira, our Central Bank Digital Currency (CBDC), holds significant growth potential. We will, therefore, undertake a comprehensive review of its implementation to optimize broad and positive economic impact.
“In 2025, we will prioritise initiatives including implementing our open banking framework, advancing contactless payment systems, and expanding our regulatory sandbox. Additionally, we will issue revised guidelines for agency banking and continue to strengthen electronic payment channels.
“Regarding Nigeria’s inclusion on the Financial Action Task Force (FATF) grey list, we fully recognize the problems this presents and are addressing legacy deficiencies with utmost urgency. Building a robust culture of compliance remains central to our efforts. We are optimistic that Nigeria will exit the grey list by Q2 of 2025”.
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