Business
CBN’s reprieve for banks imposes more hardship on Nigerians
…amid tight regulatory headwinds
The Central Bank of Nigeria (CBN) has announced a financial reprieve for commercial banks that are struggling under stringent regulatory policies, aiming to prevent instability in the banking sector. While this decision is expected to help financial institutions manage liquidity pressures and capital constraints, many Nigerians are concerned that it will further exacerbate the economic hardships they already face.
With inflation at historic highs, a weakening naira, and surging lending rates, the average citizen is finding it increasingly difficult to afford necessities, access credit, or sustain business operations. The CBN’s latest intervention has sparked debate—while banks are gaining much-needed relief, the financial squeeze on individuals and businesses continues unabated.
Recently, the CBN announced a new fee for withdrawals of less than N20,000 from another bank’s Automated Teller Machine (ATM). This directive is part of the revised ATM transaction fees, which will take effect on March 1, 2025, as outlined in a CBN circular dated February 10, 2025.
Under the updated fee structure, withdrawals from one’s own bank’s ATMs will remain free of charge. However, customers using ATMs from other banks will incur a charge of N100 per withdrawal of N20,000 or less at on-site ATMs, which are located within or directly affiliated with a bank branch. Off-site ATMs, positioned outside bank premises such as shopping malls and fuel stations, will incur an additional surcharge of up to N500 per transaction.
For international ATM withdrawals, charges will be based on cost recovery, meaning customers will pay the exact fee applied by the international acquirer. The CBN stated that implementing a charge for withdrawals below N20,000 aims to prevent customers from splitting withdrawals into smaller amounts to avoid fees.
According to the FAQ document, “Yes, the fee of N100 will apply if you withdraw less than N20,000 from another bank (a bank other than the one that issued your payment card). The reason for applying this fee for every N20,000 withdrawal is to prevent customers from having to break their withdrawals into smaller amounts.”
In other words, ATM transactions will incur a base fee of N100 per transaction. Additionally, a tiered fee structure will apply for transactions exceeding N20,000, with an extra charge of N100 for every subsequent N20,000 or portion thereof.
Another significant change in the revised structure is the removal of the three free monthly withdrawals previously allowed for customers using other banks’ ATMs. From March 1, 2025, all withdrawals from another bank’s ATM will incur charges, potentially increasing costs for customers who frequently use ATMs outside their primary bank.
The CBN has clarified that financial institutions are not permitted to charge more than the prescribed fees, although banks may choose to reduce charges based on their business strategy.
Market stakeholders believe the CBN’s decision seeks to offer a financial reprieve to commercial banks amid growing concerns over liquidity challenges, currency volatility, and high capital adequacy requirements. There is a consensus that the apex bank aims to improve banks’ ability to meet regulatory capital requirements, ease liquidity pressures that have affected lending activities, and strengthen financial institutions amid economic uncertainty.
However, while banks are receiving due consideration to navigate challenging economic conditions, the same cannot be said for ordinary Nigerians, who continue to suffer from high inflation, expensive borrowing costs, and declining purchasing power.
Despite the reprieve for banks, the policies driving Nigeria’s economic turmoil remain largely unchanged. As a result, citizens and businesses are facing higher borrowing costs, shrinking access to credit, a rising cost of living, increased banking fees and charges, forex issues, and naira devaluation.
Public Outrage and Economic Fallout
Many Nigerians have expressed frustration over the CBN’s approach, arguing that the policies disproportionately benefit banks, while ordinary citizens endure the brunt of economic hardship. Business owners, labor unions, and civil society groups have criticized the central bank for failing to implement measures that would directly alleviate financial stress for the average Nigerian.
The Manufacturers Association of Nigeria (MAN) has warned that high borrowing costs will stifle industrial growth, leading to further job losses and factory shutdowns. Meanwhile, consumer advocacy groups have called for greater regulation of banking fees, arguing that Nigerians should not have to pay more for essential financial services simply because banks are struggling to comply with regulatory policies.