Business Edge | CBN Releases Guidelines on Cash Management

The Central Bank of Nigeria’s guidelines on cash management is the focus of this edition of Business Edge. In recent times, the CBN and other commercial banking institutions have expressed concern about the risk inherent in managing cash as well as the attendant cost. As a result, the CBN has unveiled plans to wean Deposit Money Banks (DMB) off this risk of cash management. The risk and cost have led to a mix of policies introduced by Nigeria’s Central Bank with a view to reducing the demand for cash by encouraging cashless transactions. The high demand for cash also has created challenges in accessing it through the ATMs with the situation degenerating into a crisis during the last Christmas season in Nigeria. That said, banks are also now shying away from the responsibility of managing the cash and have created hurdles in the way of accessing cash via ATMs or over the counter. To discuss this development with Tolulope Adeleru-Balogun is a financial analyst and CEO of Asher Dynamic Solutions,  Muktar Mohammed who joins in from Lagos, Nigeria.

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Banks are typically known to handle cash on behalf of customers; why then are they shying away from its management and what are the costs involved in the process of using or sending cash? “When it comes to cost, it comes in two ways: the cost of moving the cash, and the manpower aspect of it,” Muktar Mohammed says. The risk, he says, is the biggest factor because of the security implication of transporting cash around. “[CBN] is working towards a cashless society- which is the primary aim of every bank across the world.” Nigerians, however, have not exactly embraced the cashless policy all the way as many of them still hold on to the belief that actual cash is what is wealth.

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The conversation also touches on banks’ own costs of infrastructure, possible solutions and details of the new CBN guidelines on cash management.

Watch in full above.


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