Central Bank of Nigeria Suspends Charges on Large Cash Deposits

The Central Bank of Nigeria (CBN) has implemented a new directive to halt the processing charges previously applied to substantial cash deposits by banks, financial institutions, and non-bank financial institutions. Effective immediately, the suspension impacts individual account deposits exceeding N500,000 and corporate account deposits surpassing N3,000,000. Previously, these deposits incurred processing fees of 2% and 3%, respectively.

This shift in policy, outlined in the “Guide to Charges by Banks, Other Financial Institutions, and Non-Bank Financial Institutions” dated December 20, 2019, will remain in effect until the end of April 2024. The directive mandates compliance from all CBN-regulated financial institutions, requiring them to refrain from imposing charges on cash deposits meeting or exceeding the specified thresholds.

The move is anticipated to encourage larger cash deposits, boost liquidity, and potentially have positive effects on various sectors, including both small and large businesses. The directive comes as a response to the evolving financial landscape and the evolving needs of depositors across Nigeria.

In 2019, the CBN introduced transaction fees on cash deposits and withdrawals, aiming to reduce the use of physical cash. The charges included 3% processing fees for withdrawals and 2% processing fees for lodgments above N500,000 for individual accounts. Corporate accounts faced 5% processing fees for withdrawals and 3% processing fees for lodgments above N3,000,000.

Additionally, just over a year ago, the CBN imposed new cash withdrawal limits, restricting individuals and corporate entities to weekly withdrawals not exceeding N100,000 and N500,000, respectively. Cash withdrawals beyond these limits were subjected to processing fees of 5% and 10%, respectively. The recent policy changes came shortly after the launch of redesigned banknotes by President Muhammadu Buhari, which has now been cancelled, allowing banks to accept both old and new notes without restrictions.