With effect from January 1, next year, no bank in Nigeria will allow more than ten million naira to be drawn on a cheque, the Central Bank of Nigeria [CBN] directed at the weekend. It said the aim was to strengthen the e-payment system in the country.
This directive will be circulated to all banks today, CBN’s deputy director, Banking Operations Department Mr. C.R. Okafor said at the annual dinner/awards night of the Abuja Clearing House/Bankers’ Committee in Abuja at the weekend.
CBN had in a circular with reference BOD/DIR/GEN/01/106 said, “As a further step in its efforts at enhancing the efficiency of the payment system in the country, the CBN hereby sets a maximum limit on cheque payment at N10 million with effect from 1st January, 2010.
“To this end, any payment value exceeding N10 million should be made through the e-payment mode such as the Central Bank Inter-Bank Funds Transfer System (CIFTS i.e. RTGS) and Nigeria Inter-Bank Settlement System Electronic Fund Transfer (NEFT) from that date.
“The maximum limit serves as a risk reduction measure in the clearing and settlement arrangement in line with international best practice. To support this initiative, deposit money banks are implored to properly educate their customers on the implementation procedure.”
Okafor said CBN will through this directive ask the banks to consolidate their accounts. He said a circular will be sent to the banks directing them to maintain a maximum of three accounts at the clearing house. He said that all other accounts outside these three will be closed by the CBN.
CBN’s Abuja Branch Controller John Chukwudifu said at the dinner that the 24 banks operating in the Abuja clearing zone had a total of 1, 247, 596 financial instruments valued at N117.04 billion.
He said they also have 481,223 funds transfers (NEFT) valued at N2.622 trillion at the clearing house as at November 30.
Chukwudifu said there was a reduction of about 410,446 in volume which translates into N4.336 trillion in value of cheques cleared in Abuja clearing zone.
He said this is a “reflection of the impact of the e-payment policy of the Federal Government which requires payments by all MDAs to be done electronically, without recourse to the use of cheque.”
He said the CBN, through the Agricultural Credit Guarantee Scheme (ACGS), guaranteed 127 loans valued at N77 million which were disbursed to farmers in the Federal Capital Territory by three banks.
First Bank of Nigeria disbursed 60 loans valued at N40.9 million; Union Bank gave 66 loans valued at N35.8 million while Unity Bank gave one loan valued at N1 million.
Also at the weekend, the Federal Ministry of Finance commended CBN for the progress made in addressing the challenges facing the banking sector. Minister of Finance Dr Mansur Muhtar said the efforts are on the right track. He said, “The Ministry is particularly supportive of the improvements being made to the accounting and financial reporting system of the sector, which will enhance transparency and accountability, strengthen corporate governance practices as well as provide a better platform for more effective risk management.”
He said the Ministry has reviewed the recent financial reports presented by the commercial banks and the associated measures to adjust their balance sheets, in line with the new rules and procedures.
He said, “While these may present short term challenges to the banks, they do provide an opportunity to draw the line and begin afresh. We remain optimistic that the steps being taken will put the financial sector on a sounder footing, which is pivotal to strengthening our economy.
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