Concerns as banks begin cash rationing

Nigerians are becoming worried that deposit money banks (DMB) have resorted to rationing cash, raising concerns of cash scarcity experienced early last year. PAUL OKAH reports.

The first quarter of 2023 was not funny to Nigerians as they experienced hardship necessitated by cash scarcity as a result of the new bank notes introduced by the Godwin Emefiele-led Central Bank of Nigeria (CBN).


It appears Nigerians will be heading to a near-repeat of the 2023 experiences as Deposit Money Banks (DMB) have resorted to rationing cash to customers in different parts of the country.


Investigation by Blueprint Weekend revealed that Automated Teller Machines (ATMs) are no longer stocked to dispense cash to customers in several banks across the Federal Capital Territory (FCT) and other parts of the country.

Also speaking with our reporter, a civil servant, Mrs Regina Olakunle, said her bank reduced the amount she could withdraw per day to just N50,000 .


“It is difficult to get cash from the banks now, especially the ATM. I don’t really know what is happening because, before I could withdraw N100,000 to N200,000 over the counter from my bank, but I can only withdraw N50,000 now. The situation is so terrible that some banks will tell you it is only N10, 000 or N20, 000 they can pay over the counter,” she said.


PoS agent speaks


Speaking with our reporter, a PoS operator in Dutse-Bmuko, Mr Israel Edidiong, said he capitalizes on cash from depositors and traders to run his business as banks have not been giving him the needed amount.


He said: “Cash scarcity is nothing new to us. We experienced it last year, but survived. Though we have been noticing a reduction in the amount dispensed by banks, we have alternative ways of getting money. If it is not from traders unable to go to the bank, then it would be through the multiple bank accounts we operate.


“For instance, I went to Zenith Bank on Friday to withdraw 500,000 cash to keep at hand ahead of the Sallah celebration, However, I was only able to get N200,000. I had to go to Gwarinpa and got N100,000 and 200,000 from my two alterative banks. That was what helped me because people usually need money during celebrations.


“Again, there is no cash scarcity that will be like what we experienced last year under Emefiele. In fact, I will call this one cash rationing, not scarcity because the cash is available, but not in quantity. My only explanation is that the banks want people to embrace digitalization and for people to be making use of electronic means for transactions and not carry much cash around, otherwise I don’t see the reason the cash in circulation should be reduced.”


Bankers explain true situation


Speaking with our reporter, a staff of TAJ bank in Wuse, Abuja, who pleaded anonymity, admitted that banks ration cash according to location and amount received from CBN.


She said: “Yes, we are rationing cash. It is not something that started today. This is how we do it: We get a certain of amount from CBN for issuance to customers. So, depending on the amount we get, we ration to customers so that it can go round.


“For instance, if a customer needs N500,000, we can only give N200,000 so that we can have some to give to other customers. The money has to go round so that no customer will say he or she came to the bank and was not giving cash.


“The rationing is not even much or too obvious, just that we like blowing things out of proportion in Nigeria. A customer can always get cash, just that it won’t be up to the large quantity of cash or amount he or she wanted. Moreover, many now prefer to give money to PoS operators, so we don’t receive much deposits like before.”

A banker worker with Firstbank in Imo state, who pleaded not to be named, confided in our reporter that the main reason for the cash scarcity is because of people hoarding the new bank notes, saying his bank rations cash according to availability and has no reason to withhold cash.


He said: “One of the reasons for cash scarcity, apart from the CBN’s cashless policy, is that people started hoarding the new naira notes, as against the old naira notes. People don’t spend the new naira notes. They prefer keeping it at home. The new notes are not much, so that led to cash scarcity. We have been experiencing the cash scarcity since February, so it just not about the Sallah.


“For instance, since February, my branch has not paid more than N50,000 to an individual, PoS agents inclusive. Another reason banks don’t have money to pay is because PoS operators now meet fuel station owners, flour dealers and, supermarkets and other big establishments, for money. These are the major businesses that deposit money in the bank. They now prefer giving money to Pos operators, who give them some percentage.


“Banks have no reason to withhold cash from customers. The truth is that we always have cash supply problem from both the CBN and the general public. These days, we practically dispense all the cash we receive from both the CBN and the depositors every day, but we ration it according to availability. We don’t connive with PoS operators as many people claim. PoS operators have alternative sources, as I earlier mentioned.”


CBN releases statistics


Last week, the CBN reported that Currency Outside Banks (CoB) fell month-on-month (MoM) by N27.5 billion (or 0.55 per cent) to N3.6 trillion in April, from N3.62 trillion in March 2024.


The CBN Money and Credit data for April showed that this was the first decline in CoB this year as it has been on the rise after the January 2024 decline by 4.37 per cent to N3.28 trillion from N3.43 trillion in December 2023.


According to analysts, the 0.55 per cent decline in currency outside banks may be a reflection of a decline in cash availability in the system.

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