As part of its attempts to guarantee enough currency in circulation, the Central Bank of Nigeria (CBN) has declared that it will penalize banks that do not disburse cash through their automated teller machines (ATMs).
CBN Governor Yemi Cardoso said this during a press conference on Tuesday following the 297th Monetary Policy Committee (MPC) meeting in Abuja.
The governor stressed that all deposit money banks need to ensure that there is always enough cash on hand for withdrawals.
CBN Kees An Eye On Banks
The governor of the CBN stated that any bank that disobeys this direction will be subject to sanctions. The central bank has implemented a monitoring mechanism to guarantee compliance.
Cardoso restated that the CBN would monitor and spot-check banks to ensure compliance, and those that didn’t meet the standards would face consequences.
He stated: “We have developed a monitoring and spot-checking system whereby we visit the banks and make sure that these procedures are carried out in the proper way.”
“And if they are not, again, there will be sanctions but I believe that at the stage we are in now, everybody realises that stakeholders play their part in ensuring that cash gets to the desired places they are intended to be.”
N1.4 Trillion Will Be Released Within The Next Three Months
Cardoso also revealed that the CBN intends to inject an extra N1.4 trillion into the economy over the following three months to enhance cash flow in the banking sector.
He stated that the purpose of this action is to guarantee adequate cash availability in ATMs and across bank branches, resolving the issues associated with cash scarcity that numerous clients have encountered.
“It is anticipated that an additional N1.4 trillion will be provided within the next three months to support the system’s overall cash flow and velocity,” he stated.
“So, from our perspective, we are doing everything possible to ensure that there is sufficient cash in the system. There is no excuse for not having sufficient cash in the system.
“Now it goes to the deployment of that cash and quite frankly, we are working very, very closely, we are engaging with all the deposit money banks to ensure that they are putting these things through their ATMs, effectively dispensing cash to those that are in need.
“And whether they are in need or not, that’s the function of the deposit money banks. And at all points in time, there should be sufficient cash in their system that nobody should go there without being able to withdraw.”
What To Note
For the second time this year, Nigeria’s currency outside the banking system fell to N3.66 trillion in July 2024.
This is N130 billion less than the N3.79 trillion amount from the previous month, indicating the Central Bank of Nigeria’s (CBN) continued efforts to tighten liquidity and encourage deposits into the formal banking system.
The decline is more than the TNC’s observation of a 0.62% (N20 billion) decline between March and April when it fell from N3.63 trillion to N3.61 trillion.
The amount of cash in circulation increased marginally by 0.12%, from N4.05 trillion in June to N4.05 trillion in July, notwithstanding the decline in currency outside banks.
The slight increase raises the possibility that the economy is stabilizing when using cash, either due to more people adopting digital transactions or laws designed to restrict cash flow.
The News Chronicles further observed that while total currency circulation increased marginally to N4.05 trillion, the percentage of cash outside banks decreased to 90.39% (N3.66 trillion) from 93.59% in June 2024.
This drop is a noteworthy development, indicating that attempts to increase the amount of money in the official banking system might be beginning to bear fruit.
