IS IT ILLEGAL FOR BANKS TO PLACE A LIMIT ON CASH WITHDRAWALS?

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IS IT ILLEGAL FOR BANKS TO PLACE A LIMIT ON CASH WITHDRAWALS? 

by Branham Chima. 


✓ DEFINITION: 

A cash withdrawal refers to the act of taking money out of a bank account, typically in the form of physical cash. This can be done through various means, such as using an ATM machine or visiting a bank branch. It involves accessing funds that are available in the account balance and converting them into physical currency. Cash withdrawals provide individuals with immediate access to their funds and can be used for various purposes, such as making purchases or paying bills in cash. 


✓ ANSWER: 

In a world where the flow of wealth is regulated and restricted, a question arises: Are the imposed withdrawable cash limits a cunning trap, preventing the free movement of funds from the banking system? Is there any legal ground for a bank to refuse cash payment to a customer, citing insufficient printing of new currency or the imposition of limits on cash withdrawals? As this directive continues to withhold a significant portion of funds in the form of cash, it forcefully and unlawfully interferes with individuals’ rights of ownership and use. Is such a restriction on property rights deemed illegal unless sanctioned by law? 

The answer to this poser was given by the Supreme Court recently. In AG KADUNA STATE & ORS. v AG FEDERATION & ORS. (2023) - SC/CV/162/2023 delivered on Friday the 3rd day of March 2023, per the Lead Judgement of Agim JSC, in respect said thus: ‘The imposition of withdrawable cash limits after collection of the old notes, amount to a scheme to entrap and not allow much of such funds come out of the banking system. My attention has not been drawn to any law that permits a bank not to pay cash to a customer on demand on the ground that the 1st defendant has not been able to print enough new naira notes or that permits the 1st defendant to direct the imposition of limits on the cash to be paid from a customer's account after deposit of the old naira notes. To the extent that the directive has continued to deprive all persons and the plaintiffs access to a substantial part of their funds in banks inform of cash, it forcefully and illegally interferes with their rights of ownership and use of their said funds. Such restriction on an owner's right to freely use his or her property is illegal unless provided for by a law.’ 

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