Cash Scarcity: CBN Fines Zenith Bank and Eight Other Banks N1.35 billion For Hoarding Cash

The Central Bank of Nigeria (CBN) has imposed fines totalling ₦1.35 billion on nine lenders for failing to meet cash disbursement requirements through Automated Teller Machines (ATMs) during the festive season. Each bank was fined ₦150 million following spot checks revealing non-compliance with cash distribution policies.

The affected banks include Fidelity Bank Plc, First Bank Plc, Keystone Bank Plc, Union Bank Plc, Globus Bank Plc, Providus Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, and Sterling Bank Plc. The fines will be directly debited from the banks’ accounts held with the apex bank.

This action underscores the CBN’s determination to enforce regulatory compliance and ensure adequate cash availability during periods of high demand. The apex bank had previously issued directives mandating that banks prioritize cash disbursement through ATMs to minimize public inconvenience, particularly during the holiday season.

The CBN has been actively cracking down on cash hoarding and diversion, warning financial institutions against practices that restrict public access to cash. Earlier enforcement measures included sanctions on banks found diverting cash to unauthorized channels, such as cash hawkers selling naira notes at a premium.

This latest wave of penalties aims to reinforce the CBN’s Clean Note Policy, which promotes the proper circulation and handling of Nigeria’s currency. The policy emphasizes the importance of ensuring that cash reaches legitimate end-users without exploitation by informal markets.

In a statement, the CBN reaffirmed its commitment to financial stability and consumer protection, noting that the enforcement of these fines serves as a warning to all financial institutions to strengthen internal controls and comply with cash distribution guidelines.

By holding banks accountable, the CBN aims to restore public confidence in the financial system and ensure equitable access to cash, particularly during peak transactional periods.

Origin’s of Naira Scarcity

The creation of the naira scarcity under CBN Governor Godwin Emefiele has been linked to controversial cash withdrawal limits and a poorly executed currency redesign policy. In late 2022, the CBN announced the redesign of the ₦200, ₦500, and ₦1,000 notes, alongside a directive to phase out old notes within a short timeframe. This decision, combined with cash withdrawal restrictions, led to widespread cash shortages, causing significant disruptions for businesses and individuals across the country. The policy faced backlash from various sectors, with critics arguing it was poorly timed and inadequately managed.