Why CBN may continue with cash withdrawal limits despite Supreme Court judgement
- The recent Supreme Court ruling is silent on cash withdrawal limits introduced by the CBN
- CBN had pegged over-counter-withdrawal to N500,000 weekly for individuals and N5 million for corporate bodies
- CBN might take advantage of the hiatus in the Supreme Court ruling to continue to implement the cash withdrawal limit
The Central Bank of Nigeria (CBN) may go ahead with implementing its cash withdrawal limit despite the ruling of the Supreme Court on Friday, March 3, 2023.
The apex court had reversed CBN’s deadline for using the old N200, N500, and N1000 notes as legal tender. The court extended their shelf lives to December 31, 2023.
Cash withdrawal limit not affected in Supreme Court ruling
But the recent Supreme Court ruling did not affect the apex bank’s cash withdrawal limit, which it says is meant to reduce cash in circulation.
Summary of the judgment of the Supreme Court on Naira redesign policy, Inibehe Effiong educates Nigerians
In a unanimous judgment on Friday, the Supreme court lambasted President Muhammdu Buhari’s approval of the policy as unconstitutional and a breach of the fundamental rights of Nigerians.
Reports say Justice Agim held that Buhari acted without consulting relevant bodies and agencies of government before directing the CBN to introduce the new naira notes unlawfully.
Court rebukes Buhari
Agim said Buhari’s unconstitutional use of powers in redesigning the naira had breached the rights of Nigerians in many ways.
Irrespective of the ruling, CBN might still implement the cash withdrawal limit as the Supreme Court judgment was silent.
On December 2022, CBN mandated deposit money banks and other financial institutions to limit over-the-counter withdrawals to N100,000 weekly for individuals and N500,000 for corporate bodies, respectively.
The circular containing the cash withdrawal limit stated that the policy became effective on January 9, 2023.
Analysts believe the policy has been essentially chaotic, creating long queues at ATM points across Nigeria, and has led to protests and violence in some parts of Nigeria.
The CBN reviewed the policy in January and increased weekly withdrawals for individuals to N500,000 and N5 million for corporate bodies.
CBN’s measures not enough to ease the cash crunch
The new withdrawal limit did little to ease the cash crunch in the country, with queues persisting in banks and ATMs and banks complaining of lack of cash in their vaults.
The apex bank had stated that it designed the policy to reduce the amount of money in circulation and estimated that over N3 trillion was outside the banking system.
A recent CBN data stated that currency in circulation has shrunk to N1.39 trillion as of January 2023, which the bank says is the lowest since 2015.
The apex bank also said that the currency in circulation was reduced to N788.92 billion on January 2o23, after mopping up about N1.78 trillion from the public primarily via the cash swap system after it introduced the new banknotes.
CBN sets date for 12-man meeting as Supreme Court tells Nigerians to use old naira notes till December
CBN Mute, bank officials speak as supreme court reverses validity of old naira
Legit.ng reported that Nigeria’s Supreme Court had nullified CBN’s directive that ended the legal tenders of the old N200, N500, and N1000 notes.
Reports say The Supreme Court, on Friday, March 3, 2023, nullified the ban on using the old N200, N500, and N1000 banknotes as legal tenders.
In a unanimous decision by a seven-member panel of Justices, the apex court held that the old banknotes should remain valid legal tenders until December 31, 2023.