The Central Bank of Nigeria (CBN) at the weekend clarified that the new cash withdrawal/deposit limit is not applicable to Microfinance Banks (MFBs) and Primary Mortgage Institutions (PMIs) because both deposit-taking institutions are expected to honour the withdrawal request of their customers and also meet other obligations.

Specifically, the apex bank explained that operators in both sub-sectors structured under the specialised banking model, were excluded from the policy of N1 million a day set for corporate bodies.

However, the CBN insisted that cash withdrawal/deposit limits are applicable to customers of operators of MFBs and PMIs.

The new cash policy, which seeks to limit daily cash withdrawal/lodgement by individual and corporate organisations to N150, 000 and N1 million respectively, commenced in Lagos this January. This policy is expected to be extended to other cities by the middle of this year. 

The banking sector regulator disclosed this in a circular titled: “Need for Clarification on Cash Withdrawal Limit for Primary Mortgage Institutions (PMIs) and Microfinance Banks (MFBs),” signed by its Acting Director, Banking and Payment System Department, Mr. Gaius Emokpae, a copy of which was posted on its website.

The circular with reference number: “BPS/DIR/GEN/CIR/01/002,” dated March 1, 2012, was addressed to a deposit money banks (DMBs).

The CBN said it had to make the clarification because it came to its notice that some commercial banks were enforcing the cash withdrawal/deposit limit for corporate organisations on PMIs and MFBs.

It explained: “PMIs and MFBs are specialised banks as defined under the new banking model which have customers that maintain savings demand and time deposit account with them. As deposit-taking institutions, they are obliged to honour the withdrawal request of their customers and other mature obligations.

“It is imperative to note that the aggregate withdrawals by the depositors of MFBs and PMIs per day could exceed N1 million, this necessitating those institutions to withdraw over N1 million from their correspondent banks in order to service their customers.

“It has therefore, become necessary to clarify that direct withdrawal/deposit by MFBs and PMIs are excluded from the policy of N1 million limit for corporate bodies to enable them meet the legitimate demands of their numerous customers. However, the cash withdrawal/deposit limits are applicable to customers of MFBs and PMIs.”

Chairman, Lagos Chapter, National Association of Microfinance Banks (NAMB), Mr. Olufemi Babajide, welcomed the clarification by the apex bank.

Babajide, who spoke in a telephone chat with THISDAY, said: “For MFBs, we withdraw large amount of funds which we in turn, lend to our customers in form of various facilities. So, there is no way that can be applied to us. So I must commend the CBN for making the clarification.”

CBN’s Deputy Governor, Operations, Mr. Tunde Lemo had explained that the new cash policy would facilitate smooth transmission of monetary policy as well as to ensure stability of the local currency. He had also declared that the initiative was adopted due to the urgent need to place the country on the path of development.

Source: Thisday/Obinna Chima