In a move reflecting the development of Nigeria’s financial system, banks have adjusted their daily over-the-counter withdrawal limit to ₦50,000. This development signifies a departure from the stricter restrictions of ₦5,000 in place just weeks ago. A recent survey by Punch reveals that institutions like Guaranty Trust Bank and Zenith Bank are leading this initiative, offering customers greater access to cash. The increased limit has been implemented at several bank branches, including a notable GTBank location along the airport road in Abuja, to meet growing customer demands.
While over-the-counter withdrawals now allow up to ₦50,000 daily, limits at Automated Teller Machines remain capped at ₦20,000. This policy change is reportedly due to an improved cash supply, enabling banks to accommodate higher withdrawal thresholds. Despite the relaxed withdrawal limits, the ripple effect on Point-of-Sale (POS) operators has been minimal. These operators have yet to lower their service charges, maintaining fees of ₦800 for withdrawals of ₦20,000 and ₦2,000 for transactions up to ₦50,000. Operators argue that a consistent and stable cash supply from banks is essential before service fees can be reviewed, as a one-time adjustment does little to ease their operational challenges.
CBN’s strategies for managing cash flow to boost economic growth.
The Central Bank of Nigeria (CBN) remains central to these developments, using withdrawal limits to regulate cash flow in the economy. By restricting the amount of physical cash in circulation, the CBN aims to reduce Inflationary Pressures while encouraging Nigerians to adopt digital payment systems. These policies affect commercial firms and present unique opportunities for financial Technology (fintech) companies. As an emerging force in the country’s financial sector, fintechs are well-positioned to benefit from the change toward cashless transactions and digital banking solutions.
Furthermore, the withdrawal limits have created an opening for Fintech companies to expand their customer base. Many Nigerians, particularly small and medium-sized business owners, rely heavily on cash. With commercial firms imposing fees for exceeding withdrawal thresholds, fintech platforms offer a compelling alternative by waiving such charges. This competitive advantage attracts new users, further strengthening fintechs’ market presence. Fintech platforms are reshaping how Nigerians perceive financial services. Their user-friendly interfaces and lightning-fast transaction speeds have won over a significant portion of the population.
Navigating the benefits and challenges of monetary policy.
This shift became evident during the Naira scarcity in 2023 when many traditional banks struggled to meet customer demands. Fintechs stepped in, providing seamless solutions and earning the trust of millions. Today, many Nigerians consider fintech accounts essential for efficient banking. Platforms like Prestmit have become household names, offering services catering to individual and business needs with unmatched convenience. One key strategy fintechs can adopt to capitalise on the withdrawal limits is agency banking. By establishing physical touchpoints in underserved rural and urban areas, fintech companies can provide much-needed access to financial services.
Meanwhile, in remote locations, Point-of-sale (POS) systems enable residents to withdraw cash and perform other banking transactions without relying on traditional bank branches. This approach promotes financial inclusion and positions fintechs as formidable competitors in Nigeria’s financial sector. Agency banking allows fintechs to reach new markets, addressing the needs of communities previously excluded from mainstream banking services. The CBN’s withdrawal limit policy, while aimed at controlling Inflation and streamlining cash flow, comes with its challenges. It places significant pressure on commercial banks, which must adapt to reduced cash dependency while maintaining customer satisfaction.
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On the other hand, fintech companies find themselves in a favourable position, leveraging the policy to innovate and grow. The interplay between traditional banks and fintech platforms is expected to drive competition and Innovation in Nigeria’s financial ecosystem. As fintechs gain traction, they reshape banking norms and contribute to a more inclusive and digitally-driven economy. As banks, fintechs, and policymakers continue to adapt, the Nigerian financial landscape is transforming. With greater access to digital platforms and expanded services, the country’s banking future is poised to be more inclusive, efficient, and innovative.