CBN makes Crucial Decisions on Kuda Bank, Microfinance Finance Banks, Others – Read details below.
The Central Bank of Nigeria (CBN) has made a significant update to its cash withdrawal limit policy, excluding Kuda Bank, primary Mortgage Banks, and Microfinance Banks that cater to individuals experiencing poverty.
In a circular dated July 31, 2023, addressed to financial institutions and signed by Musa Jimoh, the Director of Payment System Management, the CBN stated that these specific banks are no longer subject to the cash withdrawal limits initially imposed on commercial banks. The CBN clarified its stance as follows:
“The Central Bank of Nigeria hereby directs the exemption of microfinance banks and primary mortgage banks that provide banking services to the economically active poor from paying the processing fees for withdrawals above the cash withdrawal limits for direct cash withdrawals from their corresponding banks. This is to enable them to continue to play their expected roles in the economy and provide specialized retail banking service to their customers.”
However, the CBN made it clear that while these banks are exempt from the processing fees, they must still comply with the cash withdrawal limits when serving their customers, as stated in the circular with reference number BSD/DIR/PUB/LAB/015/073, dated December 21, 2022.
The cash withdrawal limits were initially introduced by the CBN during the naira redesign program in December 2022, impacting withdrawals made by customers of commercial banks. At that time, individuals were limited to a weekly withdrawal of N20,000, while corporate bodies faced a limit of N500,000. The policy was met with dissatisfaction among Nigerians, leading the CBN to raise the weekly withdrawal limits to N500,000 for individuals and N5 million for corporate organizations, respectively. Any withdrawal exceeding these approved limits now requires written approval from the bank’s Managing Director.
The recent decision to exempt microfinance banks and primary mortgage banks from the cash withdrawal limits is a strategic move by the CBN to enhance financial inclusion, particularly for those in poverty-stricken and rural areas. By doing so, the CBN aims to empower these specific banks to continue providing essential financial services to their targeted customer base in the country’s economy.
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