• Thursday, March 28, 2024
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Network failures, cashless policy push deprive bank customers of cash at ATMs on weekends

Banking services customers prefer in Nigeria

It was a cold, drizzly Friday evening in June. Osamuede was completely tired out and frustratedHe had visited four bank ATMs in the vicinity of Point Road/Liverpool Road in Apapa GRA, Lagos in desperate search of cash for his weekend expenses, but there was none to withdraw.

“This is the height of frustration!” Osamuede lamented. “All the ATMs are either out of service or temporarily unable to dispense cash. The only functional one pays N10,000 per withdrawal and takes like forever to pay one customer, and the crowd there is discouraging.”

Many bank customers are complaining of difficulty withdrawing cash from the ATMs mostly during weekends, either due to network failures or shortage of cash at the ATMs. It appears the deposit money banks are deliberately starving their customers, some say.

Uju Ogubunka, president, Bank Customers Association of Nigeria (BCAN), even though he could not ascertain the immediate cause of the development, said it could be that the authorities are trying to encourage people to do transfers rather than handling cash.

“You know we are talking about cashless economy. So, if you are talking of cashless economy you don’t support bringing cash and spending money to print the cash, so you go with a limited quantity of cash,” Ogubunka said.

READ ALSO: Banks key into CBN’s nationwide cashless policy to apply charges

The Central Bank of Nigeria (CBN) in 2012, after several engagements across multiple stakeholders, introduced the cashless policy aimed at curbing excess handling of cash or reducing the volume of currency in circulation.

The CBN department in charge of currency operations expended the sum of N64 billion printing banknotes in 2018 compared with N49.5 billion in 2017, indicating an increase of N14.51 billion or 29.31 percent. A total of N5.63 billion was expended on air charter, compared with N4.02 billion incurred in 2017. The sum of N662.21 million was also expended on currency notes disposal.

Currency in circulation declined by 2.55 percent to N2.29 billion on June 30, 2020, compared to N2.35 billion recorded on May 31, 2020, data from the CBN’s website indicated.

But the inability of bank customers to withdraw cash from ATMs during weekends is dangerous and hazardous, Ogubunka said.

“And it is also not going to encourage people to stay without cash because you may find people piling up cash in their homes. In that case, the economy suffers because when you hoard cash, you are hoarding velocity of money,” he said.

BusinessDay checks around Lagos on weekends found bank customers running from one ATM to another desperately looking for cash to withdraw, anger, and frustration written on their faces. At Ajah, Langbasa axis, close monitoring showed many bank ATMs were either experiencing a shortage of cash or network failure. At Abule-Ado, Satellite Town area, the story was much the same as only one out of many ATMs of three banks within a cluster was dispensing cash. The rest were out of service.

At Mazamazaon a Saturday morning, the saving grace for one middleaged woman was a soldier who had cash and was looking for someone to make a transfer to his relative and collect the cash in return. The woman wanted to withdraw some money to buy food items in the market, but only two out of six bank ATMs were dispensing cash and the number of people in the queue was too much. She quickly transferred N40,000 to the soldier and collected the cash in return.

READ ALSO: Tech experts canvass improved cybersecurity to optimise CBN’s cashless policy

Uche Uwaleke, a professor of finance and capital markets and chair, Banking and Finance Department, Nasarawa State University, said COVID19 has rolled back a substantial part of the progress made in the implementation of the cashless policy.

“In a period of uncertainty such as the one we are in, cash is the king as the safest and most convenient medium of exchange. So, with lockdowns in many cities and movement restrictions, a lot of people now demand cash to meet petty purchases, especially food items, where most street vendors do not have POS machinesEven shops, supermarkets and petrol stations where POS is available also prefer to collect cash due to long queues associated with processing delays and sometimes POS malfunction,” Uwaleke said.

You must have noticed that weekends, in particular, record a lot of on-line transaction failures. So, the huge demand for cash during weekends, oftentimes beyond the maximum limit a bank has provisioned to be loaded into an ATM machine in a particular day, could be responsible,” he said.

Uwaleke said the inability of a bank branch to provide cash in its ATM sufficient to meet an unexpected spike in the use of ATM could be a reflection of a temporary liquidity challenge on the part of the branch. Other reasons could be faulty or malfunctioning ATMs which are not regularly serviced or maintained by a bank’s branch.

The CBN should require banks to upgrade their IT infrastructure to strengthen on-line transactions and more POS machines should be made available to retail street-corner shops and food vendors, he said.

However, Ayodele Akinwunmi, relationship manager, corporate banking, FSDH Merchant Bank Limited, did not think it was a general development across the country.

“I am aware that the usage of alternative banking channels, including the use of ATM, other than going to the banking hall, has increased in the last few months. This is a good development for the banks, customers, and the regulators,” Akinwunmi said.