Business News of 2014-01-14

Traders unhappy with BoG over 3rd party withdrawal limit

Traders have kicked against the recent Bank of Ghana directive which places a limit on how much a third party can withdraw from the bank.
According to the traders, the move will not only defeat the call to encourage savings but also slow down what they describe as their brisk business activities on a daily basis.
The traders who mostly operate from Okaishie, a major business centre in the central business district of Accra and Abossey Okai, the hub for the sale of second hand vehicle spare parts, said at a time when confidence in the cheque system had fast waned while the various credit cards among others were not working effectively in the country, cutting down the amount of money that could be withdrawn from the counter was not only worrying but a disincentive.
Consequently, they called on the central bank to reconsider its position and ensure that the necessary underground work to ensure an effective and reliable cash payment system was put in place before carrying out such an activity.
The President of the Ghana Union of Traders Associations (GUTA), Mr George Kwaku Ofori, who spoke to the Graphic Business in reaction to the BoG directive, said most of the traders of the association transacted business with huge sums of cash on a daily basis and would therefore require amounts far more than what the BoG had approved over the counter to enable them to operate effectively.
“Many of our members have huge sums of money in the bank but they operate a savings account. As a result, they can only withdraw for their clients or business partners when they are present at the bank,” he said.
According to him, “I can go with the person to do a banker’s draft but I may not be able to do so because there may be other pressing things that I will have to attend to and that is why we find it difficult to comprehend the new directive.”
Mr Ofori also raised the issue of the cheque system which he said was not trusted by people because most of them bounce at the counter and could not be relied on considering the nature of their business.
On his part, Mr Collins Boateng, a Toyota second hand spare parts dealer at Abossey Okai, said: “I take only cash for the sales and I feel troubled because I give out my parts in bulk and, therefore, take huge sums far beyond the limit set by the bank of Ghana.”
“I do not like the cheques because I have many that have bounced, yet I cannot find the people who issued them. With the e-zwich and other forms of payment, do not go there because it is even more cumbersome to use and the machines are not readily available to use,” he argued.
From Okaishie, Mr William Addo also noted that traders would be compelled to keep their money in their offices and shops instead of saving them in the bank because the volume of business some of us transacted on a daily basis using cash was way beyond the minimum level set by the BoG.
He said the BoG should be able to set the right systems in place to restore the confidence people have in the cheque system while the other means of payment (including cards) are well set up before the implementation of the new directive.
Divergent view
However, a Banking Consultant, Nana Otuo Acheampong, has hailed the central bank’s directive for banks not to honour 3rd party cheque withdrawals exceeding GH¢5,000 over the counter.
The move, he said, meant that businesses and individuals would be further limited on the amounts they could withdraw with cheques given to them to clear over the counter.
Describing it as a good initiative, as part of efforts to promote a cashless economy, he explained that the directive would also serve the best interest of both customers and banks.
In an interview with the GRAPHIC BUSINESS on January 8, 2014, Nana Acheampong, who was also a Principal Consultant at the Osei Tutu II Centre for Executive Education & Research, said: “from the perspective of both the customer and the banks, the directive is a reasonable and laudable one.”
From the customer’s perspectives, taking physical cash from the counter to the tune of GH¢10,000 (as was the case before now) was risky as customers could be robbed or trailed from the bank due to the huge amount.
Also, the reduction of the amount, according to him, would go a long way to decrease the risk of fraud, adding, “if the amount you can withdraw is less, you would have to do multiple withdrawals when you are defrauding someone; hence, the lower the figure, the better.”
Looking at it from the bank’s perspective, Nana Acheampong said handling of physical cash at the banks, especially when it was huge, contributed to inefficiencies as people had to queue before it got to their turn.
That practice, he said, would be made better by reducing the amount 3rd parties could withdraw and enhance their service delivery.
BoG directive
The Bank of Ghana (BoG), in a directive, asked banks in the country to pay up to GH¢5,000 to third parties who presented cheques to them.
This new limit is half the previous GH¢10,000 limit issued by the central bank in July 2013. The directive took effect from January 1, 2014; it does not apply to third party cheques that are presented for the credit of an account through clearing.
The further tightening of the third party over-the-counter threshold, according to BoG, is to reduce the incidence of fraud and other malfeasance and also to "limit the scope for abuse of the banking system by criminals."
The directive, however, does not apply where the payee is the drawer of the cheque.
Driving a cashless economy
All these initiatives are aimed at moving the economy to a cashless one where people would rely on other payment modes other than cash.
Nana Otuo Acheampong said the directive was in no mean way moving the economy to a cashless one where people would be more inclined to using electronic machines and other services like mobile money.
According to him, the cash movement in the society has not helped the fight against fraud in the banking system, especially for bank customers, and so limiting the amount was a good idea.
The Nigerian case
In neighbouring Nigeria, the Central Bank of Nigeria recently began the full implementation of its cashless policy in the Federal Capital Territory, Rivers, Kano, Anambra, Ogun and Abia states with two different thresholds unlike Ghana which was uniform.
This follows the end of a three-month moratorium on the charges given to customers who withdraw or deposit higher than the amount stipulated in the cashless policy document.
The policy, according to the Punch of October 13, 2013, allows the CBN to peg the daily cumulative cash withdrawal or deposit limit for individual accounts at N500,000, while that of corporate accounts is fixed at N3m per day.
He said any customer who deposited above N500,000 per day from Wednesday would be charged three per cent, while withdrawals above the limit would attract five per cent charge.
For corporate bodies, the threshold is N2m. If you deposit or withdraw any money above the threshold per day, if it is deposit, it will attract three per cent charge, and if it is withdrawal, it attracts five per cent.
Source: Graphic Business
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