Deposit money banks and other financial institutions must ensure that over-the-counter cash withdrawals by both individuals and corporate entities do not exceed N100,000 and N500,00 per week, respectively, in accordance with a new policy that the Central Bank of Nigeria (CBN) has announced.
According to a circular issued today by the apex bank, the updated cash withdrawal limitations would go into effect on January 9, 2023, nationwide.
Just a few weeks before the new policy went into effect, President Muhammadu Buhari unveiled the newly revised N200, N500, and N1000 banknotes.
According to the new cash withdrawal limits, no bank will process any third-party checks that are worth more than N50,000 over the counter.
According to the CBN, there are still “extant limits of N10,000,000 on clearing cheques.”
Each person’s weekly maximum withdrawal from an ATM would be reduced to N100,000. Withdrawals made using this method are also subject to a daily withdrawal cap of N20,000.
Similarly, the daily withdrawal limit for POS terminal withdrawals is N20,000.
The new N500 and N1000 banknotes cannot be withdrawn from ATMs because only N200 and lower will be made available through the channel.
The CBN claims that there is a provision that permits withdrawals of N5 million for individuals and N10 million for corporations once each month. This is only applicable in exceptional cases, and any party wishing to take advantage of this provision shall provide convincing evidence of such party’s bona fide business goals.
“In compelling circumstances, not exceeding once a month, where cash withdrawal above the prescribed limits is required for legitimate purposes, such cash withdrawals shall not exceed N5, 000,000 and N10, 000, 000 for individuals and corporate organizations, respectively, and shall be subject to the referenced processing fees in (1) above, in addition to the enhanced due diligence and further information requirements.”
To qualify for this exception, people and corporate entities must provide the information below:
- Valid means of identification.
- Bank verification number (BVN)
- Notarised declaration by the customer stating the reason for the excess cash withdrawal.
- Written approval by the Managing Directors for drawees withdrawing on behalf of companies.
- The CEOs of banks must authorize such withdrawals in writing.
The revised cash withdrawal limit guideline is in keeping with the CBN’s cashless strategy, the central bank of Nigeria. The ultimate objective is to influence more Nigerians to use alternative financial methods. Some examples of these alternative channels are mobile banking, USSD, debit cards, POS, eNaira, etc.
Additionally, the measure is a component of the apex bank’s plans to protect against misuse, forgery, and stockpiling of the newly redesigned banknotes.
A surplus of money in circulation is what drives inflation. In addition, Nigeria has seen significant inflation, which peaked in October 2022 at 21.09%. In retaliation, the CBN increased the benchmark interest rate (MPR) by 100 basis points to 16.5% during its final Monetary Policy Committee (MPC) meeting of the year.