CBN Lifts Cash Deposit Restriction; Allows $10K Withdrawals Daily

The Central Bank of Nigeria (CBN) lifted the cash deposit limit into domiciliary accounts and disclosed that the withdrawal limit is $10,000 daily. As per new guidelines, users can easily access $10,000 cash on a daily basis.

Dr. Isa Abdulmumin, Director of Corporate Communications in CBN, issued a statement, disclosing that the restriction on domiciliary accounts has been lifted.

"All visible and invisible transactions (medicals, school fees, BTA/PTA, airline, and other remittances) are eligible for the investors' and exporters' (I&E) window," Dr. Abdulmumin said, Leadership reported on Sunday. "DMBs shall ensure expeditious processing of all eligible invisible transactions on behalf of their customers using the applicable rate at the I&E window."

He went on to explain that ordinary domiciliary account holders can easily have "unfettered and unrestricted access to funds in their accounts," adding that these account holders are allowed to "utilize cash deposits not exceeding USD$ 10,000 per day or its equivalent via telegraphic transfer."

While cash deposits don't have any limit, Deposit Money Banks (DMBs) are supposed to conduct the proper KYC (Know Your Customer) process for each account holder.

"Cash deposits into domiciliary accounts will not be restricted, subject to DMBs conducting proper KYC, due diligence and adhering to the spirit and letter of extant AML/CFT laws and other relevant rules and regulations," Dr. Abdulmumin said.

He concluded, "The CBN will prioritize orderly settlement of any committed FX forward transactions as they fall due in order to further boost market confidence."

This move of the CBN will ensure that there is liquidity, transparency, and price discovery in the FX market. Moreover, it will also boost account holders' confidence in the market.

Previously, there was confusion in Nigeria, regarding the withdrawal limit being $10,000 per week or per month. However, the new guidelines have clarified the confusion and noted that the withdrawal limit is $10,000 on a daily basis, adding that there are no restrictions on the deposit amount.

Since demonetization was announced last year, Nigeria is struggling with cash in the market. The government also tried to encourage people to go cashless by using digital currency. However, it didn't work well for the country.

The International Monetary Fund (IMF) disclosed last month that the usage of digital currency, eNaira, has been "disappointingly low," noting that 98.5 percent of people who downloaded the eNaira wallets didn't use the digital currency.

After the government announced the demonetization of three denominations including N200, N500, and N1000, it mopped up over 70% of cash in the country and caused the country an estimated loss of N20 trillion.

The recent move of the CBN seems to help penetrate more cash in the market and improve Nigeria's economy. However, World Bank revealed in April that the Nigerian currency naira lost 10.2% of its value due to a rise in food and fuel prices in the country.