The Central Bank of Nigeria, CBN, has said that its decision to increase charges on cash withdrawals from ATMs of other banks was needed to incentivise banks to ensure improved access to cash at the ATMs.
Meanwhile, the apex bank, at the end of its Monetary Policy Committee, MPC, meeting yesterday decided to retain the Monetary Policy Rate, MPR, its benchmark interest rate, at 27.5%.
CBN Governor, Olayemi Cardoso, disclosed these during a press briefing at the end of the MPC meeting.
He stated: “The Committee was unanimous in its decision to hold all parameters and thus decided as follows, retain the MPR at 27.50%, and retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. Retain the Cash Reserve Ratio of Deposit Money Banks at 50% and merchant banks at 16% and four retain the Liquidity Ratio at 30%.”
New ATM charge will improve access to cash
Cardoso also said that the recent decision of CBN to increase cash withdrawal charges to N100 per N20,000 from ATM of other banks will encourage banks to increase cash availability at the ATMs hence leading to the proliferation of ATMs and making access to cash more seamless.
“The banks are interested and need to be incentivized to ensure that there’s regular access for their ATMs that people can come in, take money and go out, and I think the situation has improved a lot, but a lot is not enough. A lot is not enough. It has to work perfectly and seamlessly, and if we are planning for the future, certain costs do need to be absorbed, and this is one of them”.
“My view is that it isn’t something that is going to dissuade people from having access in a seamless manner to their money. On the contrary, it should be encouraged and it should put the banks on greater scrutiny, especially where payments are being made for withdrawals.
“But the good news is that if you are withdrawing from your own bank, it’s not going to cost you anything. If you go to another bank where you go regularly and you feel this is where you want to be, you can actually go there and apply for a card also, and that will not cost you anything.
“So that is still something that is very, very much open, and we believe that with this new measure, it will encourage a greater proliferation of ATMs, and will make access to money, more seamless and indeed, will discourage those who are who have taken advantage of a gap and are charging a exorbitant prices to disperse money to people. It will literally shut that particular area out of business over a period of time,” Cardoso added.
FX stability needed for economic growth
Addressing concerns over the need to balance the inflation fighting efforts of the CBN with need for quest to achieve significant economic growth, Cardoso said that the objective of the apex bank is to achieve stability in the forex and financial markets as this is critical to attractive foreign investment needed to enhance economic growth.
He said: “Confidence is gradually returning to our markets, which shows that we are on the right course now.
“Obviously, as that happens, we are in a better position to begin the process of moderating interest rates, because stability is very, very important, and if investors do not see stability, they do not come to those markets.
“So our own objectives have been and will continue to be, to achieve stability in the foreign exchange markets and in the financial markets, that’s our objective. And as long as that happens, we are confident that we will begin to see more investments coming in, which should spur the badly needed growth.
“One other thing I will add to that is the fact that as of now, our currency is a lot more competitive. And with that competitiveness, we’ve seen an increasing interest from the international investors to want to come and invest in the country’s future.”
Aims at single-digit inflation
Speaking on the CBN’s outlook for inflation, Cardoso said that the aim is to bring down the inflation rate to single digits in the medium to long term.
He said: “We will continue the orthodox monetary policies that we have embarked upon. We’ve seen the outcome, and it’s in a positive direction, and we will stay that course. We will certainly stay that course.
“We will be vigilant. We will not take anything for granted. We believe that inflation has been too high for too long. It has been too high for too long. So our objective in the medium to long term is to ensure that we are able to bring this down from the double-digit to the single digit.”
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