The Central Bank of Nigeria (CBN) has announced the exemption of microfinance banks (MFBs) and primary mortgage banks (PMBs) from paying processing fees for withdrawals above the cash withdrawal limits.
This decision was disclosed in a circular issued on Monday and signed by Musa Jimoh, the director of the payments system management department. This move aims to support financial inclusion and promote specialized retail banking services,
The circular stated, “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 correspondent banks,” the circular reads.
“This is to enable them to continue to play their expected roles in the economy and provide specialized retail banking services to their customers.
“Please, note that the microfinance and primary mortgage banks are required to fully comply with the cash withdrawal limits in serving their customers as per the circular with reference number BSD/DIR/PUB/LAB/015/073 dated December 21, 2022. Please be guided accordingly.”
In December 2022, the CBN directed deposit money banks and other financial institutions to ensure that over-the-counter cash withdrawals by individuals and corporate entities per week do not exceed N100,000 and N500,000, respectively.
Following the implementation of the cash withdrawal policy on January 9, 2023, there were mixed reactions from Nigerians. Consequently, the CBN responded by increasing the maximum weekly cash withdrawal limits for both individuals and corporate organizations to N500,000 and N5 million, respectively.
However, the apex bank introduced a processing fee of 3 percent and 5 percent for individual and corporate withdrawals above the specified limit, respectively, in compelling circumstances where such transactions are required for legitimate purposes. The intention behind these fees is to encourage the adoption of the cashless policy and to reduce the volume of cash circulating outside the formal banking system.
The latest exemption for microfinance and primary mortgage banks is expected to provide them with the necessary flexibility to cater to their customer base while supporting financial inclusion efforts and strengthening the overall economy.
In light of this development, customers of these banking institutions can now enjoy more convenient access to cash withdrawal services without incurring any additional charges, provided they remain within the revised withdrawal limits set by the CBN.
As the Central Bank of Nigeria continues to implement measures to enhance the financial landscape, it encourages all stakeholders to abide by the regulations and contribute to the growth and stability of the nation’s banking sector.
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