CBN explains how banks will deduct new deposit charges

CBN explains how banks will deduct new deposit charges

The Central Bank of Nigeria (CBN) recently announced the imposition of 2% charges on bank deposits above N500,000 in addition to already existing charges on withdrawals.

The development is part of the central bank's plan for nationwide implementation of the cashless policy which will begin by March 31, 2020.

The apex bank made this known in a circular to all Deposit Money Banks (DMBs) in the country on Tuesday, September 17.

The new policy has, however, been condemned by many Nigerians who believe it is obnoxious. Also, the policy has generated some confusion as many seek to know how Deposit Money Banks (DMBs) will be deducting the charges.

This prompted the central bank to provide further explanation regarding the new charges. According to the apex bank, the charges on deposit and withdrawal on the savings account will be carried out on the excess of the limit it has set.

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"Charges as stipulated by the Cash-less policy will be applied on the excess amount above the limit of deposit or withdrawal amount," the bank stated.

Explaining further, the apex bank said: "The Cash-less Policy deposit/withdrawal charge is only on the amount in excess of the limit. For instance, if you deposit cash of N501,000.00, N1,000.00 is in excess of the limit. The bank will charge you 2% of N1,000.00 which is N20.00."

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Meanwhile, previously reported that the Federal Executive Council (FEC) approved the increase in Value Added Tax (VAT) rate to 7.2% from its previous 5%.

The minister of finance, budget and national planning, Zainab Ahmed, made this known to journalists at the state house after the FEC meeting on Wednesday, September 11.

It should be noted that the new development is still subject to an amendment of the 1994 VAT act by the National Assembly.

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