December 4, 2025/CSL Update
The Central Bank of Nigeria (CBN) has issued a new circular introducing stricter cash-withdrawal limits and revising deposit-related charges as part of ongoing efforts to reduce cash dependency and improve financial system transparency. Effective 01 January 2026, weekly cash-withdrawal limits will be capped at ₦500,000 for individuals and ₦5 million for corporate entities. Withdrawals above these thresholds will attract fees of 3% and 5%, respectively. At the same time, the CBN has abolished the fees previously charged on excess cash deposits, removing a cost burden that often-discouraged individuals and businesses from depositing cash in formal banking channels.
This directive marks another step in Nigeria’s long-running push toward a cashless economy—an agenda that began in 2012 and has since been reinforced through initiatives such as POS agent expansion, mobile-money licensing, digital-payment incentives, and periodic withdrawal caps. However, implementation challenges persist. Limited internet penetration, unreliable power supply, and low banking adoption in rural communities continue to impede digital-payment uptake. Consequently, cash usage remains high, particularly within the informal sector.
The new policy aims to address these distortions by reducing the high costs of managing physical cash, curbing the security risks associated with cash-heavy transactions, and mitigating vulnerabilities related to money laundering. Its introduction also coincides with Nigeria’s recent removal from the Financial Action Task Force (FATF) grey list, underscoring the country’s renewed commitment to strengthening financial oversight and enhancing transparency.
Economically, the directive is expected to improve monetary policy
transmission, enhance tax visibility, and channel more liquidity into the formal financial system. The elimination of deposit-related fees should encourage businesses to lodge excess cash in banks, supporting more efficient credit allocation and bolstering banking sector liquidity. Over the long term, higher digital-payment volumes are anticipated to stimulate further fintech innovation, deepen payment infrastructure, and reduce the structural inefficiencies associated with cash logistics.
However, the policy presents significant challenges, particularly for Nigeria’s large unbanked and underbanked population. Stricter withdrawal limits may constrain financial access for rural communities that rely heavily on cash, potentially widening the financial-inclusion gap. Small informal businesses could also face disruptions in meeting their day-to-day cash obligations.
To cushion these impacts, targeted interventions will be essential. Expanding agent-banking networks, improving mobile-network reliability, and subsidising digital-transaction costs for low-income users would help ease the transition towards reduced cash usage. Strengthening consumer-protection frameworks for digital transactions will also be crucial in building trust and ensuring safe, widespread adoption. Ultimately, while the new CBN directive signals a decisive shift toward a more efficient, transparent, and digitally driven financial system, its effectiveness will hinge on parallel investments in infrastructure, financial inclusion, and public-confidence-building measures.
Click here to download full report: CSL Nigeria Daily – 04 December 2025 – Economy.pdf
