Commercial Banks Seek To Reduce ‘Over The Counter’ Withdrawals With This…


Commercial banks have approached the Central Bank of Nigeria, CBN, with a proposal to limit over the counter cash withdrawals by bank customers to N10,000.

This new measure by the DMB’s is intended to drastically reduce the number of customers that would need to physically visit banking halls for transactions.

The objectives include greater use of electronic banking and smaller workforce  – as a means of cutting cost of operations.

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Deposit Money Banks, DMBs under the aegis of the Bankers Committee, sent the proposal to the Central Bank of Nigeria (CBN) last week. The proposal was presented at the committee’s meeting but it is not clear whether it was considered.

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Recall that lately, some banks laid off many workers, citing operational losses especially as the Federal Government Treasury Single Account Policy, TSA, has deprived them of federal government deposits.

A feedback from the CBN on the request is expected soonest. A report by the Central Bank of Nigeria (CBN) shows that deposits taken by commercial banks declined by N1.029 trillion between April 2015 and April 2016. The report also shows that more customers are finding their loans difficult to service.

The report presented by CBN Deputy Governor (Economic Policy) Dr. Sarah Alade to last week’s Bankers’ Committee meeting in Abuja attributed the reduction in deposits to the Treasury Single Account (TSA).

She said the poor loan servicing resulted in the increase of non- performing loans (NPLs) to a ratio of 10.1 per cent over and above the CBN prudential limit of five per cent as at end April.

The CBN Deputy Governor also told members of the Committee that total deposits in the banks declined by N1.029 trillion from April 2015 to April 2016.

According to her, “the decrease in deposits were largely due to the introduction of the Treasury Single Account in the system.”

The TSA policy, which began in September, last year, directs all Ministries Department and Agencies to move government funds to the CBN.

The CBN ‘State of the Economy’ document presented to the Bankers’ Committee last week, showed that unaudited Profit Before Tax of banks for the period ended April 2016 indicated a decrease from N222 billion in April last year to N198 billion, representing a 10.8 per cent or N24 billion decrease.

“The decline was driven largely by a decrease in both interest and non-interests income which decline by 6 per cent or N50 billion and 54 per cent of N259 billion, respectively,” the document read.

It explained that the banking sector was still faced with a lot of pressure points, some of which it listed as resurgence of inflationary pressures in the face of negative output growth, continuing low oil prices, and lack of fiscal buffers.

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Also, other  major challenges confronting the industry, according to the CBN are capital flow reversals, rising pressure on exchange rate in the face of declining external reserves, and huge growth in credit to the government to compensate for declining oil receipts.