Court refuses to halt CBN's cash limit policy

 

In a recent court ruling, the Federal High Court in Abuja has declined a suit to stop the Central Bank of Nigeria (CBN) from enforcing its cash limit policy. The suit, which was filed by a businessman, sought to challenge the legality of the policy and stop its implementation. This post will discuss the ruling and the implications it has for the CBN's policy.

What is the cash limit policy?

The cash limit policy is a directive issued by the Central Bank of Nigeria (CBN) in an effort to reduce the amount of physical cash circulating in the economy. The directive, which was issued on December 17, 2019, limits the amount of cash that individuals and companies can withdraw from their bank accounts. Specifically, it limits the amount of cash withdrawals to N500,000 per day for individuals and N5 million per day for corporate entities. The policy also limits the maximum daily deposit to N1 million for individuals and N5 million for corporate entities. Furthermore, the directive imposes a limit of N50,000 per day on deposits made via bank ATMs. The CBN has stated that the policy is necessary in order to improve financial inclusion, reduce money laundering and other criminal activities, and protect the banking sector from systemic risks.

Why was the lawsuit filed?

The lawsuit was filed by a group of individuals and organizations, who argued that the cash limit policy of the Central Bank of Nigeria (CBN) was unconstitutional and illegal. They alleged that the CBN had exceeded its powers and violated the constitutional rights of citizens by restricting their access to cash. Furthermore, they argued that the policy caused unnecessary hardship to the public, especially those with low incomes and limited access to banking services. They sought an injunction to stop the policy from being enforced and damages for any losses incurred as a result of it.

What did the court say?

The Federal High Court in Lagos has declined to stop the Central Bank of Nigeria (CBN) from implementing its cash limit policy. The suit was filed by a Lagos businessman, Kufreabasi Usua, who argued that the CBN’s policy is unconstitutional and will cause serious economic hardship. 

In his ruling, Justice Nnamdi Dimgba dismissed the case for lacking merit. He ruled that the petitioner had failed to show how the policy will affect him directly or how it violates his rights. He also noted that the CBN had taken reasonable measures to ensure the success of the policy and protect citizens from potential losses. 

Justice Dimgba said, “The powers of the Central Bank of Nigeria to regulate banking operations is not in doubt and this court cannot interfere with the decisions of the apex bank.” He added that “the policy in question is reasonable and is aimed at achieving a public good.” The court ordered Usua to pay all costs incurred in filing and prosecuting the case.

What are the implications of the decision?

The court's decision to decline the suit to stop the Central Bank of Nigeria's cash limit policy could have wide-ranging implications for both businesses and consumers in the country. Businesses will be forced to adhere to the limits placed on cash transactions, limiting their ability to purchase goods and services. For consumers, it could mean that they will need to seek alternative payment methods when making payments, as they may not be able to rely on cash in some cases. Furthermore, businesses may need to invest in additional resources and technologies to accommodate non-cash payment methods.

Overall, the decision to uphold the CBN's cash limit policy could be a beneficial step towards creating a more efficient and secure payments system in Nigeria. However, it could also have unintended consequences for businesses and consumers if the limits are too stringent or cause disruption to existing practices. It remains to be seen how the policy will affect economic activity in the country in the long-term.