Banks’ Lending Hits N4.3tn as CBN Warns of Scarcity

Nigeria still doesn’t have enough cash, even though the amount of cash held outside of banks has grown by N1.59 trillion since last year.Banks’ Lending Hits N4.3tn as CBN Warns of Scarcity

Many pieces of money in circulation are still not in banks, according to the Central Bank of Nigeria’s money and credit statistics. In 2024, more than 90% of all money in circulation was still not in formal financial institutions.

The data showed that the amount of money that wasn’t in banks rose to N4.29tn in October 2024, making up 94.3% of the N4.55tn in circulation.

This is a big increase from the same time last year, when most of the money (89.6%) was not in banks (N2.70tn), representing a growth of 59% or N1.59tn.

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Month over month, the amount held outside of banks rose by 6.8 percent, or N270bn, from September 2024, when it was N4.02tn.

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In September 2024, the amount of money that wasn’t in banks was N4.02tn, which was 93.1% of the total N4.31tn in circulation.

Over the past year, this was a 66.3% rise from N2.42tn in September 2023, when 87.5% of the total was held outside of banks. The rise from one month to the next was 3.8%.

In August 2024, the amount of money that wasn’t in banks reached N3.87tn, which was 93.3% of the total N4.14tn in circulation.

Over the past year, this was a 73.9 percent rise from N2.22tn in August 2023, when 83.6 percent of the total currency was not in banks.

Following the same pattern, N3.67tn was held outside of banks in July 2024, which was 90.5% of the N4.05tn in circulation.

Even though Nigeria has tried to encourage cashless transactions, the data shows that most Nigerians still prefer to use cash. This could make it harder for the country to modernise its financial systems.

Olusoji Oluwole, President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions, said that the CBN’s inability to meet the cash needs of commercial banks was to blame for the growing lack of cash across the country.

The CBN will fine banks

Also, on Friday, the Central Bank of Nigeria (CBN) said that Deposit Money Banks that helped illegally move mint naira notes to money hawkers and shady agents would be fined N150m per branch.

Saturday PUNCH reported that people are selling more naira notes for ridiculously high prices in different parts of the country. This is because Nigerians are still having a hard time getting cash in banks, even though the Central Bank of Nigeria (CBN) has threatened to make it easier.

The central bank said this in a circular that came out on Friday, December 13, 2024, and was signed by Mohammed Olayemi, who is the acting director of the Currency Operations Department.

The circular showed that the Central Bank of Nigeria (CBN) was worried about the growing number of hawkers selling mint naira notes. The bank said this was making it harder to give cash to customers and the public in an efficient and effective way.

The circular, which referred to a previous directive from November 13, 2024, made it clear that the central bank was determined to stop the naira from being used as money for goods.

Any branch of a financial institution that is found to have broken the rules will be fined N150m for the first offence.

The CBN warned that if the same mistakes were made again, harsher punishments would be given under the Banks and Other Financial Institutions Act 2020.

To make sure everyone was following the rules, the top bank said it would do more random checks in banking halls and ATMs and send “mystery shoppers” across the country to find places where people are selling cash illegally.

In the circular, it said, “CBN will continue to step up its regular spot checks of banking halls and ATMs to look over cash payouts to customers of banks, as well as mystery shopping at all known cash-hawking spots across the country.”

“In this case, fraudulent deposit money banks or other financial institutions that help or encourage the illegal flow of mint banknotes to currency hawkers and dishonest economic agents who sell naira banknotes will be fined N150,000,000.00 (one hundred and fifty million naira) per fraudulent branch at first, and then the full force of the relevant provisions of BOFIA 2020 will be applied in later cases.”