The Central Bank of Nigeria (CBN) yesterday issued a strong directive to commercial banks concerning alleged activities by their staff that are reportedly obstructing the smooth flow of cash in the economy. The CBN expressed concerns over malpractices involving Point of Sale (PoS) operators, many of whom are bank employees or terminal owners, which have been identified as major impediments to efficient cash circulation.
According to the CBN, these malpractices are driven by a profit-seeking motive among PoS operators, who collude with bank staff to prioritize their own business interests over the seamless operation of ATMs and other cash distribution channels. The central bank’s scrutiny was prompted by reports, including an investigation by UMPIRE NEWS, revealing instances where Automated Teller Machines (ATMs) were found without cash, purportedly due to banks diverting cash to PoS operators in exchange for commission.
Highlighting its role in ensuring adequate cash availability, the CBN disclosed that it consistently supplies cash to banks based on their withdrawal requests across its 37 locations nationwide. This commitment is reflected in the notable increase in currency-in-circulation observed from the last quarter of 2023 through June 2024.
Furthermore, the CBN raised concerns about PoS operators sourcing cash from high-volume entities such as petrol stations and supermarkets at premium rates. This practice not only inflates operational costs for PoS operators but also disrupts the smooth flow of cash back into the banking system for proper processing and redistribution.
In response to these findings, the CBN has taken decisive action by issuing circulars instructing deposit money banks to implement immediate corrective measures. These measures include enhanced monitoring of PoS operators associated with their institutions to ensure compliance with existing guidelines. The CBN emphasized its readiness to impose stringent sanctions on any bank found violating these directives or involved in activities that undermine the integrity of the financial system.
Moreover, the CBN announced its intention to review the guidelines governing agency banking operations in Nigeria. The objective is to refocus these operations on serving unbanked populations in rural and remote areas, rather than concentrating disproportionately in urban centers. This strategic shift aims to enhance financial inclusion and support economic development across underserved regions of the country.
This recent directive underscores the CBN’s ongoing efforts to maintain transparency and efficiency within Nigeria’s financial sector. It follows similar warnings issued in December 2023, when the CBN alerted deposit money banks and PoS operators about the detrimental effects of collusion on cash availability and the circulation of the national currency.
In a statement attributed to Mrs. Sidi-Ali Hakama, Acting Director of Corporate Communications at the CBN, the bank reaffirmed its commitment to investigating any reported cases capable of disrupting the smooth functioning of the economy. The CBN’s proactive stance reflects its role as the apex regulatory institution in Nigeria’s banking industry, responsible for safeguarding the stability and integrity of the nation’s financial system.
