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CBN to Summon United Bank Over N25,000 Minimum Balance
[July 06, 2011]

CBN to Summon United Bank Over N25,000 Minimum Balance


Jul 06, 2011 (Leadership/All Africa Global Media via COMTEX) -- Following plans by deposit money banks to increase their minimum account balance to N25,000, the Central Bank of Nigeria yesterday said it was not aware of the issue, stressing that it would summon the United Bank for Africa (UBA) which had made the plan public for explanations.



The deputy governor, operations, Mr. Tunde Lemo, who stated this in Abuja during a press conference, said the planned increment of minimum account balance by commercial banks was not a CBN policy.

He said: "Let me just say that this is not a CBN policy. We do not prescribe how banks conduct their business to the point that we should be able to certify what their account balances should be. We don't micro-manage. We generally will not be happy to see the banking system conducting their services to the exclusion of very small amount, but we are going to find out from UBA what this is all about.


"Probably, they are looking at the fact that we have 1,000 micro finance institutions and perhaps they already have channels for those little amounts of money; maybe that is why they are doing it. But we do not know at the moment why they are contemplating a minimum balance of N25,000." UBA recently informed its customers that with effect from July 1, 2011, the required minimum balance for savings and current account holders would be N25,000, just as some other banks were still in the process of finalising their plans.

Lemo also shed some light on the proposed cash withdrawal limit, saying that the CBN was seeking to ensure that the essence of the policy was properly understood and seen as beneficial for the nation that desires economic growth and development in line with the vision 2020 economic agenda.

He noted that the policy does not prohibit the withdrawal of more than N150,000, adding that those who still desire to conduct cash transactions with their banks were free to do so within the provisions of the directive.

According to him, "The banks are poised and committed to an aggressive roll-out of Automatic Teller Machines (ATMs) and Point-of-Sale (POS) and other electronic channels to ensure these are readily available to the high cash-driven individuals and business." He said that, currently, there were funds transfer products of banks that ensure same-day value to customers anywhere in the country through the electronic funds transfer system.

On communication infrastructure, which had hitherto affected the level of availability of POS and ATMs to users in the country, Lemo stated that the CBN and the Bankers Committee had commenced concrete actions to ensure that priority was given to payments related to data traffic by telecommunication networks.

On electricity challenge, he said the CBN had agreed on minimum POS standards which specify adequate battery life span to support uninterrupted availability of service of the terminals, maintaining that non-acceptance of some cards over the POS had equally been addressed.

"Our sister countries in Africa are making progress in reducing the level of cash transactions in their economy. Nigeria currently has 13 PoS/per 100,000 adults whereas Uganda has 453 POS/100,000 adults, South Africa is 1,063 POS/1000 adults and Brazil 2,247 POS/100,000. If Uganda could take the bold step to embrace more efficient payments options some years ago, it is very clear that Nigeria requires an aggressive POS and other electronic payment rollout to realise the Vision 2020," he argued.

However, UBA has explained that its recent initiative for N25,000 minimum account balance was set to migrate some customers to conducive channel for good banking services.

The executive director, corporate banking of the UBA, Mr Ifeatu Onejeme, said at a press briefing yesterday that the essence of the innovation was to reduce the huge crowd being experienced in the banking hall.

He said that it would be difficult for the bank which has 700 branches to render quality banking services to seven million customers on a daily basis without good information technology in the financial system.

On the N25,000 minimum balance, he explained that it was not meant for all customers, adding that some groups of account holders such as pensioners, military, paramilitary, police and salary accounts were exempted from the bank's new policy.

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