Banks’ cash withdrawal limit is illegal – Supreme Court

The Supreme Court has ruled that cash withdrawal restrictions imposed by banks as a result of a shortage of currency notes in circulation are a violation of citizens’ rights.

A seven-man judicial panel presided over by John Okoro made the declaration in a unanimous decision delivered on Friday.

“These restrictions on the owner’s right to freely use the property are invalid unless provided by law,” Emmanuel Agim, a member of the court panel that read the main verdict, held.

The court handed down its ruling on a suit challenging the federal government to illegally withdraw the old N200, N500, and N1,000 notes from circulation.

The federal government, under its demonetisation policy, in October 2022, introduced the newly redesigned N200, N500, and N1,000 notes and aims to withdraw the old version of the currency notes from circulation within 90 days.

In wisdom, in Central Bank of Nigeria (CBN) also placed a maximum cash withdrawal limit of N500,000 per week for individuals and a maximum of N5 million per week for corporate entities.

The implementation of the policy went haywire as the lack of supply of new notes led to cash shortages across the country.

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Many residents queue up at ATM centers frantically for cash to meet their basic needs but often go home empty-handed. The situation led to violent protests by desperate citizens who could not get access to the money they were looking for.

Commercial banks must limit cash withdrawals to customers in a futile attempt to distribute available cash to the greatest number of citizens.

The Supreme Court declared this action by the commercial bank as a violation of the rights of citizens.

“My attention has not been drawn to the law that allows banks not to pay cash to customers on demand on the grounds that defendant 1 cannot print new naira notes,” Mr. Agim said.

He also said that he was not aware of any law “that allows the 1st defendant to directly impose a limit on the cash payable from the customer’s account after the deposit of old naira notes”.

“To the extent that the directive has continued to deprive all people and plaintiffs of access to a substantial part of the funds in the banks in the form of cash, coercion and illegal interferes with the right to own and use the funds for,” Mr. Agim added. “Such restrictions on the owner’s right to freely use the property are unlawful unless authorized by law.”

The Supreme Court overruled Mr. Buhari’s directive to withdraw the old N200, N500, and N1.0000 notes from circulation.

It also ordered that the old naira notes would remain valid and should continue to circulate alongside the new ones until December 31.