News

New Nigerian banking policy aimed at reducing money laundering, transaction costs to customers

July 24, 2011

Lamido Sanusi, governor of the Central Bank of Nigeria (CBN), on July 21 discussed the rationale behind the new banking policy in the country aimed at reducing the industry's cost-to-serve by 30 percent, as well as boosting the nation’s efforts toward addressing money laundering and terrorism.

According to an article in Business Day Online, Sanusi, speaking from the House of Representatives floor, attempted to clarify issues on the new banking policy associated with daily cash withdrawal for individuals and corporate bodies and non-interest banking (Islamic banking) in the country.

The proposed daily cash withdrawal limit of N150,000 for individuals and N1 million for corporate customers would reduce the high cost of cash transactions, which Sanusi noted reached N2 trillion in 2010. Costs are projected to reach N200 billion by 2012.

He provided a break down from 2009 that totaled N114.5 billion in direct cost incurred to the financial system. Twenty-four percent (N27.3 billion) was spent on cash-in-transit; 67 percent (N69.1 billion) on cash processing; and 9 percent (N18.1 billion), excluding the cost of infrastructure and employees, was attributed to cash logistics by the CBN and 24 banks operating within the country.

Sanusi said the initiatives would eliminate public financial support by 90 percent and would have a direct impact on the banking industry's efficiency, reduce lending rates to borrowers and improve the country’s financial infrastructure.

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