CBN Laments Drop On Demand Deposits In Q1
Afimag.com –
Data from the Central Bank of Nigeria (CBN), have shown that demand deposits dropped from N20.12trillion in January 2023 to N19.91trillion by March.
This was engineered by the publics who continued to make huge withdrawals from deposit money banks, bringing total amount of demand deposits to drop by N210bn between January and March 2023.
A report emerging from Corporate Finance Institute, said a demand deposit is money deposited into a bank account with funds that can be withdrawn on-demand at any time.
This means that the depositor would typically use demand deposit funds to pay everyday expenses.
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The Corporate Finance Institute further stated that many people would make large withdrawals from the bank during a financial crisis.
According to data released by CBN, massive withdrawal would lead to decrease in deposit strength which would prone the banks loan and become cashless.
“The withdrawals will lead to a decline in demand deposits and a decrease in the money supply, with banks left with less money to loan out.”
The large withdrawal was triggered by the naira redesign policy of the CBN, which led to cash crunch in the country.
The policy seemed to have led to a lack of trust in the banking system, with Nigerians making large withdrawals and hoarding cash, contrary to the withdrawal limits introduced by the CBN.
Recall that CBN on December 06, 2022, said that with effect from January 09, 2023, the maximum over-the-counter cash withdrawal limit by individuals and corporate organizations per week, would be N100,000 and N500,000 respectively,
It stated that withdrawals above these limits would attract processing fees of five per cent and 10 per cent respectively.
It further added that the maximum cash withdrawal per week via Automated Teller Machines (ATM) from January 09, 2023, would be N100,000, subject to a maximum of N20,000 cash withdrawal per day.