November 30, 2011
The Central Bank of Nigeria (CBN) has said that it would sanction any merchant that failed to comply with its directives on cash-lite banking.
Cash-lite banking refers to the process of carrying light cash around. It was adopted as a replacement for cashless banking, which CBN believe d has been miscontrued by many Nigerians. Under the CBN’s guidelines for cash-lite banking, merchants were licensed to carry out certain responsibilities that would promote the system
The CBN’s Acting Director, Banking Payments System Department, Gaius Emokape, said in a statement, that some merchants have been licensed to carry out cash-lite banking, adding that any of the merhants that failed to comply with the regulatory rules will be sanctioned.
Emokpae said the apex bank has designed a format through which the merchants would be sending their reports to the Nigerian Interbank Settlement System(NIBBS), adding that some merchants have not been using the format.
It has observed that some merchants are yet to comply with the directive for sending their reports in the required formats even after the given timeline of October 1, 2011. "Merchants are therefore mandated to comply with NIBSS format on or before November 30, 2011, failing which, he warned, the CBN shall sanction any errant party with a penalty of N50,000 for each day they fail to comply".
The apex bank said it acted based on powers conferred in it in section 47 of the CBN Act No. 7 of 2007. Here, the CBN was charged with the duty of facilitating the clearing of cheques, credit instruments for banks and for this purpose to organise, in conjunction with other banks, clearing houses in such places as it may consider necessary.
The rules apply to clearing and settlement in the Nigeria Bankers Clearing Houses which practice cheque truncation system. However, where there is a conflict between the provisions of the cheque truncation guidelines and revised Nigeria bankers’ clearing house rules, the former would prevail.
E-Clearing otherwise known as cheque truncation, involves stopping the physical movement of the cheque and replacing the physical instrument with the image of the instrument and the corresponding data contained in Magnetic Ink Character Reader (MICR) line. The cheque details are captured, typically by the bank presenting the cheque or its clearing agent and electronically presented in an agreed format to the clearing house for ward delivery to the paying bank for payment.
Unlike the more common form of presentation where a cheque is physically presented to the paying bank, a truncated cheque is typically stored by the presenting bank electronically. house rules, the former would prevail.
He said CBN would ensure a one -day settlement cycle for Point of Sale (PoS) transactions. The one-day settlement cycle, known in the industry as Tier-One, is seen by the apex bank as a viable plan to ensuring the realisation of the Cash-lite banking system which is to commence in January, 2012, in Lagos.
He said that adopting the Tier-One model will encourage the implementation of electronic payments in the country, adding that the apex bank has also designed a format for sending settlement reports to the Nigeria Interbank Settlement System (NIBSS) aimed at giving value t merchants on the payment model.
"In order to build and sustain public confidence in the electronic payment system, especially for the successful implementation of the Cash-lite Lagos projects, it is important for merchants to get value for PoS transactions on Tier-One," he said.