Articles

Bank Cash Users’ List Crash

11 Nov 2012

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CBN Governor, Sanusi Lamido Sanusi



By Festus Akanbi
In spite of the teething problems that have so far manifested in the operation of the Cashless policy in Lagos this year, industry operators say they have been experiencing a drop in the list of cash users in the Lagos area even as the Central Bank of Nigeria (CBN) perfects plan to extend the policy to other parts of the country next year.

According to the apex bank, “The N150, 000 maximum limit imposed on third party cheques for across the counter withdrawals, which is only available in Lagos will, from January, next year, go national.

The announcement came amidst conflicting reports over the operation of the policy, which is intended, among others, to reduce the volume of cash in the system and cut down the cost of currency management in banks.

However, bank executives, who spoke with THISDAY in separate interviews, said contrary to a picture of apathy to the policy painted in certain quarters, a large chunk of members of the banking community has embraced the pilot scheme of the policy in Lagos.

Managing Director, Sterling Bank Plc, Mr. Yemi Adeola, in his scorecard for the cashless policy, said the banking industry has embraced the policy and that the policy has come to stay.

When confronted with reports that bank customers have continued to reject the cashless policy, the Sterling Bank chief said the data available to the bank suggested otherwise, given the drastic fall in the number of cash users in banks nowadays.

Using Sterling Bank as an example, Adeola said, “We have seen our branches in Lagos drop from our list of top cash users since the introduction of the policy – a clear sign that people are responding.”

The bank chief said the current wave of pessimism over the adoption of the cashless policy was normal, expressing the confidence that the anticipated drop in level of cash in circulation would soon become a reality.

“We expect that it will take some time before total cash in circulation drops to the anticipated level but the early signs are quite promising.” 

He, however, noted that the policy is still facing some challenges, which he said would soon be addressed. “Our progress in providing alternative payment channels has been slow as the reliability of the available communication solutions continues to be a challenge.  We are, however, evaluating an industry-wide solution (at Bankers’ Committee level), one that should significantly improve our ability to serve our customers better,” he said.

Listing the gains of the cashless policy, he said, “The benefits of the policy when fully achieved would be increased convenience, additional service options, cheaper access to out-of-branch banking services, and reduced risk of cash-related crimes to the individual. For financial institutions, it would increase access to capital, reduce revenue leakage, and cash handling costs and drive incremental investments in alternative channels and lead to product innovation. Without the policy, the banks might not have found compelling business reasons for doing so.”

Another banker that expressed similar optimism over the policy is the Managing Director, Ecobank Nigeria Plc, Mr. Jibril Aku, who said the policy was going on well.

In an interview with THISDAY, Aku said, “We know that sometimes, behaviour does not change overnight and there will always be some resistance. Remember when we started ATMs, initially, people were not embracing it, but today, when you look at all cash withdrawals that are below N150,000, more are withdrawn through ATM than through the banking hall. In fact, the CBN has it that it is almost 50 per cent. Today, the ATMs have gained acceptability, but it took some time. “I will say that the policy is going well.

We know that it is not like a switch that everybody can easily change.  There are some infrastructural challenges and we are having some discussions with the telecommunication companies as to how much support they can give because the telecoms companies make more money from voice than from data. The central bank through the Nigerian Interbank Settlement System (NIBSS) is in discussion with them to provide GPRS services to all those terminals so that they can function. The adoption may be a bit slow, but we will get there and in three years time, we won’t be having this conversation.

“When I look at the adoption of ATMs and I look at where we have gone with PoS and internet banking platform, I think it is growing. We are beginning to record more transactions and growth in interbank transfers from one bank to another, rather than the traditional way of paying with cash,” the Ecobank chief said.

The apex bank, through the Deputy Governor, Operations Directorate Tunde Lemo had disclosed that 104,858 Point of Sale terminals have already been deployed and activated in Lagos as part of the cashless Nigeria initiative.

Delivering a keynote address at a Mobile Money Round Table in Lagos recently, Lemo, who was represented by an official from the Shared Services Office, CBN, Mr. Chimene Eleonu, said, “The cashless project is gaining traction in Nigeria. The number of deployed and active PoS terminals has grown from 5,557 as at January 2012 to 104,858 as at October 14, 2012.
Another 176,604 PoS terminals are already registered.

“Cumulative PoS transactions recorded 1,501,193 transactions valued at N27.8bn compared to mere 3,197 transactions valued at N99, 657,191.52 in January 2012.” Lemo said in the last one week alone, 71,003 PoS transactions accounted for N1.2bn, leading to a steady decrease in currency in circulation.

The CBN had planned to have over 100,000 PoS terminals deployed by 2012, and another 450,000 by 2015. In view of this, Lemo said, “We have exceeded our agreed targets of 40,000 PoS terminals for the year and are in good stead to reach our 2012 target of 150,000. It is, therefore, imperative that the sensitisation and education to enlighten the consumer on security of electronic channels continue.”

According to CBN figures, which revealed that deployed and active PoS terminals stood at 18,874 as at March 4, 2012, 85,984 new PoS terminals have been activated in Lagos in the past six months, a feat which prompted Lemo to re-affirm that the cash-less scheme was gaining ground.

Tags: Business, Nigeria, Featured, Bank Cash

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