By Opeyemi Issa InvestAdvocate

Lagos (INVESTADVOCATE)- Nigerian Banks are expected to save about N200 billion cost on cash management in the next few years when the cash-less policy is fully embraced.

Niyi Ajao, Acting Chief Executive Officer (Ag CEO) of the Nigerian Inter-Bank Settlement System (NIBSS) Wednesday said this at the Zenith Bank Plc Bi-Monthly Forum of the Finance Correspondents Association of Nigeria (FICAN).

Ajao who spoke on the topic “The Cash-less Lagos Policy: The Role of NIBSS” said in his presentation that the cost of cash management in Nigerian Financial System is high, and if the policy by Nigeria’s Central Bank is fully embraced, it is estimated that Nigerian Banks will save about N200 billion in cost of cash management in the next few years.

“It is estimated that direct cost of cash may reach N200 billion at the end of year 2012; but if the cash-less policy is fully embraced, Banks are expected to save up to N200 billion on cash management in the next few years” he said.

As at last year, it was about N180 billion and at the end of 2012, it is projected to be about N200 billion if we don’t do anything” he said.

Ajao who spoke on the advantages of the cash-less policy advocated the need for Nigerians to embrace the Cash-less Policy which will boost the real sector of the Nigerian Economy; “Bankers will have enough cash to loan out with low interest rate” he said.

“Cash-less Policy will encourage cash in the Banks and going cashless will reduce the cost of Banking Operations” he said.

Ajao also affirmed that such policy will assist in increasing sales and commercial activities, as more convenient payment options other than cash are now available to buyers.

According to NIBSS CEO, cash-less banking has multiplier effect on profitability, higher wages, higher employment, higher GDP for the economy.

He explained that alternatives to cash payment include cheque, bank transfer, Same-Day Inter-Bank Transfer (NEFT), NIBSS Instant Payments (NIP), Standing Orders, Direct Debits, Payment Cards, Automatic Teller Machines (ATM), Point of Sale (POS) Payments, Mobile Payments (micro-payments among others.

Ajao said that NIBSS is at a point of fully implementing cheque truncation system in the country. The practice will phase out physical clearing of cheques and reduce the clearing days for banks by at least one day (T+1).

He further affirmed that the CBN a cheque clearing rule is expected to provide for the regulation and management of cheque truncation in Nigeria with the view to reducing cost and days of clearing instruments. It was also meant to articulate the rights and responsibilities of presenting and paying banks in the Cheque Truncation System.

On Monday March 19 2012, Nigeria’s Central Bank said having monitored the partial implementation of the Cash-less Policy in Lagos State and following discussions with various stakeholders on the effective implementation of the project, has decided to reassess the policy to allow for smooth transition and adoption in Lagos State in the first instance, and the entire country at a later date.

Consequent upon this, Nigeria’s Central Bank said as a responsive institution, it has reviewed the policy as follows: The daily cumulative limits of N150,000 and N1 million have been reviewed upwards to N500,000 and N3 million on free withdrawals and lodgments by individual and corporate customers respectively.

The processing fee for withdrawals above the limit for individual customers has been reviewed downwards from 10% to 3%, while the processing fee for withdrawals above the limit for corporate bodies has also been reviewed downwards from 20% to 5%.

The processing fee for lodgments above the limit for individual customers has been reviewed downwards from 10% to 2%, while the processing fee for lodgments above the limit for corporate bodies has also been reviewed downwards from 20% to 3%.

However, the CBN said exemptions have been granted to Ministries, Departments and Agencies, “(MDAs) of the Federal and State Governments on lodgments for accounts operated by them, for the purpose of revenue collections only.

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