Revised cash policy, real effects

The Central Bank of Nigeria (CBN) has revised cash-related policies, effective January 1, 2026, removing all limits and fees on cash deposits.

The development is already generating reactions from sections of Nigerians. While some believe that it may increase illicit financial inflows ahead of the 2027 general elections, others say the policy may be good for citizens.

Daily Trust reports that the Central Bank removed all limits and fees on cash deposits, in an overhaul of cash-management rules since 2022.

From January 1, 2026, customers will be able to deposit any amount of cash into banks without penalties, marking a major shift from the regulator’s previous restrictions designed to curb the economy’s heavy reliance on cash.

Under the revised rules, individuals can now withdraw up to N500,000 weekly, while corporates can withdraw up to N5 million.

Withdrawals above these thresholds will attract a 3% fee for individuals and 5% for corporates, shared between the CBN (40%) and the financial institution (60%).

These limits also apply to ATM withdrawals, which are capped at N100,000 daily and N500,000 weekly. All naira denominations may now be loaded into ATMs.

The directive also confirms that the N100,000 cap on cashing third-party cheques across the counter remains, but will now count toward a customer’s weekly withdrawal total.

What it means for Nigerians, according to experts

Experts who spoke with Daily Trust yesterday said this is a major policy decision that is expected to affect all segments of Nigerians, especially traders and small and medium business owners.

Speaking yesterday, a member of the Daily Trust Board of Economists, Aliyu Ahmed, noted that the implications are multifaceted depending on the size and nature of business and impact on the meso economy.

Aliyu, who was a permanent secretary in the Ministry of Finance, said, “For the very large firms for instance, it is unlikely that this will make serious impact in the way and manner they do business, because it is in the interest of big firms to stay cashless as far as practicable to mitigate potential risks of handling large volume of cash and the attendant cost of handling same.

“The same will apply for medium scale enterprises. Indeed, the availability and preponderance of POS machines have reduced the propensity for businesses to accumulate cash both for large scale and medium enterprises.

“For macro and micro enterprises, especially in the very remote locations and farm settlements, who trade in food and related items, as well as petty traders who are largely itinerant, increased availability of cash is a boon to the economies of rural communities. The downside is the attendant risks that this portends for rural dwellers who are currently under-siege by bandits.

“On the macro economy, overall, the revised policy is a double edge sword, because on one hand, it will encourage individuals and firms to deposit their cash holdings into their bank accounts, thereby enabling the CBN to more accurately, estimate the liquidity in the system and consequently improve the efficacy of monetary policy,” he said.

He added that, “On the other hand, increase in thresholds for withdrawals for both individuals and firms could lead to increase in money supply which could potentially trigger demand push inflation because too much money would be chasing fewer goods, especially in short to medium term if we are unable increase the supply of available goods in the system.

“It is likely the CBN is hoping that on a balance, more people will have the confidence to bring in their cash holdings to the banks than withdraw same because of the trust and confidence that they can have access to cash when they need it.

“Lastly, it is my view that this may not be a good signal as we approach the next election, especially, since we have indicated severally that we should discourage the use of cash to induce voters in our electoral process and indeed it is against our electoral laws. Availability of too much cash could compromise the electoral process if unchecked,” he said.

Also speaking,  Dr Muda Yusuf, the Chief Executive Officer, Centre for the Promotion of Private Enterprise [CPPE] stated that the new policy will encourage cash that is outside the system to come freely into the system.

“That will encourage more cash to come within the system. So you don’t have too much cash lying around because we must also recognise that if you have an economy that is highly informal, there will be a lot of cash transaction.

“Now, with all these insecurity problem, quite a number of bank branches have closed because it’s also risky for them to be holding more cash. But generally, we must agree that the cashless policy has gained a lot of traction. If you look at electronic money transfers, transfers by POS, transfers by web payments, online payments, electronic payments have increased significantly.

“Even among the so-called informal people, electronic payments has gained traction. In general, the policy will encourage more cash to come into the system.”

He, however, advised the CBN saying, “As much as possible, we need to advise the CBN to avoid policies that will reverse the gains that we have made in the cashless policy.

“They just have to be careful about that. Because more and more people now have migrated onto the electronic payment system,” he said.

Dr. Yusuf added that as for the cashless policy, nothing has really changed as it is still very much in place.

“For the cashless, remarkable progress has been made if we look at the amount of transactions that they have had on POS and we should, as much as possible, try to maintain that momentum,” he added.

In the same vein, Prof. Ken Ife, said, “The CBN is the monetary policy body in the country and they know what is best and must have seen genuine reasons for doing this.”

On his part, the Executive Director of the Centre for Fiscal Transparency and Public Integrity, Dr. Umar Yakubu, stated that “As the Centre for Fiscal Transparency and Public Integrity, we view the Central Bank of Nigeria’s (CBN) decision to end limits on cash deposits and raise weekly withdrawal limits as a significant step back for the country’s anti-corruption, anti-money laundering, and cashless policy objectives.”

Speaking further, he noted that while the reversal may offer short-term relief to citizens grappling with limited digital infrastructure and past cash shortages, the timing raises concerns about fiscal transparency and the potential for increased illicit financial flows, particularly in the form of election spending.

“The most immediate and critical implication is the increased risk of illicit cash flows, which directly impacts election integrity and transparency.

“Risk of vote buying and undocumented spending: Higher cash limits provide an easier avenue for political actors to withdraw large sums of money for vote buying and other forms of undocumented, off-the-books election expenditures. This severely undermines the oversight functions of anti-corruption agencies and election bodies,” he further said.

He said that “Large cash transactions are inherently difficult to trace, making it harder to link funds to specific illicit activities or sources. This creates a fertile ground for money laundering and the deployment of illicit financial flows, bypassing the formal banking system’s transparency measures.

“Also, it will weaken Anti-Money Laundering (AML) efforts because the original policy aimed to force high-value transactions into the digital sphere, where they could be automatically flagged under Know Your Customer (KYC) and Suspicious Transaction Reporting (STR) protocols. Reverting the limits diminishes the effectiveness of these core AML mechanisms,” he added.

The CBN circular

According to the CBN, the decision to overhaul its cash-related policies is driven by the need to reduce the rising cost of managing physical currency, bolster security around cash movements, and curb money laundering by encouraging greater use of electronic payment channels.

In the circular, the CBN confirmed that “the cumulative limit on cash deposits is entirely removed, and the associated fee for excess deposits will no longer apply.”

The bank said this change is intended to ease the burden on individuals and businesses, which operate cash-heavy activities, while also improving liquidity within the banking system.

Under the revised framework, weekly withdrawal limits across all channels—Over-the-Counter (OTC), Automated Teller Machines (ATMs), and Point of Sale (PoS) terminals—have been pegged at N500,000 for individuals and N5 million for corporate entities. While banks must adhere to these thresholds, the CBN noted that withdrawals exceeding the limits will attract processing fees of three per cent for individuals and five per cent for corporate customers.

The circular clarified that daily ATM withdrawals remain capped at N100,000 per customer but must still fall within the overall weekly ceiling of N500,000 for individuals. It also announced the end of the special authorisation that previously allowed individuals to withdraw N5 million once a month and corporate bodies N10 million once a month.

In another adjustment, banks are now permitted to load all denominations of the naira in their ATMs, removing earlier restrictions that limited ATM cassettes to smaller notes.

The CBN also provided details on the sharing formula for the revenue generated from excess cash withdrawal fees. The circular states that 40 per cent of such revenue will accrue to the CBN, while 60 per  cent will go to the bank or financial institution that processed the transaction.

Deposit Money Banks (DMBs) and other financial institutions are additionally required to submit monthly reports detailing cash withdrawal transactions above the set limits and all cash deposit activities. To ensure transparency, banks must create dedicated internal ledger accounts to warehouse charges collected from excess withdrawals.

The circular also provided clarity on exemptions. Accounts belonging to the federal, state, and local governments, as well as accounts of microfinance banks and primary mortgage banks maintained with commercial and non-interest banks, will not be bound by the weekly withdrawal limits or the associated excess withdrawal fees.

However, the CBN confirmed that foreign embassies, diplomatic missions, and donor agencies would no longer enjoy exemptions previously granted under the old cash policy.

Describing the directive as mandatory, the CBN instructed all deposit-taking financial institutions in Nigeria to immediately begin preparations for full implementation on January 1, 2026.

The apex bank said the reforms are part of a broader effort to strengthen the efficiency of Nigeria’s financial system and to strike a balance between cash usage and digital payments in the country’s evolving economy.

Back story

The Central Bank of Nigeria (CBN) in 2022 announced a new policy that caps all cash withdrawals by individuals and corporate organisations at N100,000 and N500,000  respectively, every week.

Daily withdrawals from point-of-sale (POS) and automated teller machines (ATMs) are capped at N20,000 per person. Processing costs of 5% and 10%, respectively, are applied to any cash withdrawals that are made above the specified limits.

These cash withdrawal restrictions were enforced on January 9, 2023.

Individuals and corporations can be allowed to withdraw N5 million and N10 million respectively, once each month. The people and organisations involved must provide the following details in order to be eligible for this exception:

Valid forms of identification

A bank verification number (BVN), a notarised statement outlining the purpose for the excess cash withdrawal, written authorisation from the bank’s CEOs, written authorisation from the bank’s CEOs, written consent from the Managing Directors for drawees withdrawing on behalf of businesses.

The CBN’s goal was to persuade (or coerce) more Nigerians to adopt the cashless policy and conduct their financial transactions through alternate channels such as mobile banking, USSD, debit cards, POS, eNaira, etc.

What Nigerians are saying

Paul Oyewusi, a trader described the increase in withdrawal limit as a welcome development, saying that the country is still cash-dependent.

He added that the increase will boost business transactions, especially within the informal sector.

“It is a good one, especially for businesses that depend on cash to make payments. Maybe you have to pay suppliers, artisans, or buy raw materials to run daily operations.

“When you limit how much they can withdraw it strains the business. Not every business can operate on cash transfer; some businesses actually need physical cash to run, especially small and medium enterprises,” he said.

He revealed that some people explore other means using multiple cards to withdraw cash.

“The old limit, people bypassed it because the restriction was unrealistic.

“POS were charging high fees. People split withdrawals across multiple cards to ensure that they get what they need. It will reduce pressure on banks because money runs out quickly and they try to use people to transfer. It will reduce the queue. It is good for the security of the country,” he said.

Grace Ayobami said that the withdrawal increase will improve the ease of doing business.

“This is a great development in advancing the livelihood of Nigerians. CBN raising the weekly withdrawal will help individuals, entrepreneurs and even businesses to make financial improvement in the year 2026,” she said.

However, a Lagos-based resident, who simply identifies himself as Prince Leke, warned that the policy might encourage vote buying as the 2027 electioneering approaches.

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