The Central Bank of Nigeria (CBN) has issued a stern warning to Deposit Money Banks (DMBs) regarding cash hoarding and diversion, cautioning that such actions will attract severe penalties.
In a circular dated 13 November 2024, signed by the Acting Director of Currency Operations, Muhammad J. Olayemi, and released by the apex bank on Friday, the CBN outlined measures to ensure the efficient and transparent disbursement of cash.
The CBN reminded banks of its ongoing mystery shopping exercises and spot checks, aimed at discouraging the misuse of naira notes and ensuring responsible cash distribution, particularly as the festive season approaches.
The circular noted that these initiatives are designed to curb the flow of newly minted banknotes to unauthorised hawkers and to promote effective cash disbursement to the public.
The apex bank further stated that any DMB found to have links with seized cash from unauthorised hawkers would face financial penalties. Such banks would be fined 10 per cent of the total value of cash withdrawn from the CBN on the day the offence occurred. Repeat offenders would face an additional five per cent penalty for each subsequent breach.
The CBN also emphasised that cash hoarding, diversion, and other practices hindering cash flow are violations of its Clean Note Policy. Defaulters, it warned, would face sanctions, including additional fines and other regulatory actions.
The circular read:
“For the avoidance of doubt, it should be noted that:
a) DMBs to whom cash seized from ‘hawkers’ of cash is traced will be penalised 10 per cent of the total value of cash withdrawn on the day the seized cash was withdrawn from the Central Bank of Nigeria. Every subsequent offence will incur an incremental penalty of 5 per cent.
b) DMBs found engaging in cash hoarding, diversion, or any actions that hinder efficient cash distribution, including violations of the Clean Note Policy, will incur appropriate sanctions.”
Given the heightened demand for cash during the festive period, the CBN has directed banks to establish internal controls to ensure accountability and transparency in cash handling. The apex bank also urged DMBs to prioritise cash dispensing through Automated Teller Machines (ATMs) to improve public access.
This directive follows growing public complaints about limited access to cash, particularly from ATMs. To ensure compliance, the CBN announced plans to collaborate with law enforcement agencies to enhance monitoring efforts through spot checks and mystery shopping activities. These measures aim to hold erring banks accountable and curtail the abuse of cash.
Earlier reports by indicated that ATMs of many Deposit Money Banks have remained consistently empty in recent months due to a persistent low cash supply. It was also revealed that some banks, particularly in the Federal Capital Territory, have implemented a new round of cash rationing, limiting maximum over-the-counter withdrawals to between ₦5,000 and ₦20,000 per day.
While banks struggle with cash shortages, Point-of-Sale (PoS) operators have increasingly met the cash needs of customers.