Nigerians shun Banks as cash deposits dropped by N210 billion in first quarter

Investigations have shown that deposits in commercial banks operating in Nigeria dropped in the first quarter of 2023 according to data from the financial regulator, the Central Bank of Nigeria (CBN).

In the first quarter, which covers between January and March, deposits fell by N210 billion or 1.04 per cent during the period of review.

Agenda reports that the deposits depreciated to N19.91 trillion at the end of March, from the N20.12 trillion the deposit money banks had in their vault in January.

Deposits are cash readily available for customer withdrawals. A decline in deposits reduces liquidity available for commercial banks to lend to their retail or corporate customers.

This affects a deposit money bank’s revenue generated from loan advancement or credits, which is another source of income for financial institutions.

The drop in deposits occurred during the period the central bank reduced cash in circulation through the Naira redesign policy which was implemented on February 10, 2023.

CBN had compelled Nigerians to deposit their old N200, N500 and N1,000 cash in banks in exchange for the redesigned Naira notes by phasing out the old banknotes on February 10, 2023.

However, following the compliance, Nigerians were unable to lay their hands on the new currency, leading to a distrust in commercial banks and CBN.

The inability to withdraw their money led to protests against banks, with some bank buildings set on fire and some destroyed – this forced bank employees to disguise themselves when entering the banks or exiting the premises.

There have been long queues at banks as customers seek to withdraw their cash after the Supreme Court lifted the restriction placed on the old cash and said it was still legal till December 31, 2023.

With the experience of Nigerians in the quarter under review not many are willing to take their cash to the bank for deposit.

There is mistrust now as people now devise other means of safe keeping their money instead of taking it to the bank which they may not be able to withdraw when they need it.

The mistrust does not only affect only naira deposit and withdrawal as many complain of difficulties in withdrawing dollars and other foreign currencies sent to them from abroad thereby making life difficult to them and also crippling their businesses.