National Telescope national telescope newspaper
The Central Bank of Nigeria (CBN) has issued a stern warning to Deposit Money Banks (DMBs) over the hoarding and diversion of cash, stressing that such actions will attract severe penalties.
In a circular dated November 13, 2024, and signed by Muhammad J. Olayemi, Acting Director of Currency Operations, the CBN outlined measures to ensure a transparent and efficient cash distribution system, especially as the holiday season approaches.
The apex bank reminded banks of its ongoing “mystery shopping” and spot checks aimed at discouraging the misuse of naira notes. The exercise is designed to prevent newly minted banknotes from being diverted to illegal hawkers and ensure that cash reaches the public without disruption.
Banks found guilty of having seized cash from unauthorized hawkers will be penalized 10% of the total value of the cash withdrawn from the CBN on the day the offense was committed. Repeat offenders will face an additional 5% penalty for each subsequent breach.
The CBN also warned against practices that hinder the flow of cash, including hoarding and diversion, which it said violate the Clean Note Policy. The bank emphasized that violators would face sanctions, including financial penalties and other regulatory actions.
The circular further read: “For the avoidance of doubt, DMBs found to be in possession of cash seized from ‘hawkers’ will incur a penalty of 10% of the total value of cash withdrawn on the day the offense was committed. Each subsequent violation will attract a 5% incremental penalty. DMBs involved in cash hoarding, diversion, or actions that impede efficient cash distribution will also face appropriate sanctions.”
As the festive season typically sees a rise in cash demand, the CBN directed banks to enhance their internal controls to ensure proper handling and disbursement of cash. Banks have also been urged to prioritize cash dispensing through Automated Teller Machines (ATMs) to improve public access.
This directive comes amid growing complaints of limited cash access, especially at ATMs, where many customers have struggled to withdraw funds. Some DMBs, particularly in the Federal Capital Territory, have already begun rationing cash, restricting over-the-counter withdrawals to between N5,000 and N20,000 per day.
The CBN has also promised to collaborate with law enforcement agencies to intensify monitoring and ensure compliance, including increasing spot checks and mystery shopping efforts to identify and sanction erring banks.
In recent months, many ATMs have remained empty, with banks facing a continued shortage of cash. Meanwhile, Point-of-Sales (POS) operators have stepped in to meet the cash needs of customers, further highlighting the cash flow challenges faced by DMBs.
