This article made me remember my first day in the Banking Operations and Ethics class many years ago. We were introduced to the origin of the word ‘bank’. We learnt that the root of the word ‘bank’ originated from the Italian word ‘banco’ meaning the ‘table’, with the German version being ‘banc’ – referring to the ‘bench’, the ‘counter’ or the benches. The benches were used as makeshift desks or exchange counters by the bankers of old to make transactions with their customers.
Though banking has moved with time and been redefined by modern technology which enables customers to use alternative delivery channels (Debits/Credit Cards etc.) for transactions without necessarily visiting a branch, counters will still form an integral part of banks’ branches (at least in our part of the world) with the finest architectural designs. Walk-in customers to banking halls interact with staff, make enquiries, make cash/cheque deposits, cash out various sums of money with or without cheques over-the-counter.
Limit on Third-Party Payments
Recognising the risks associated with the handling of bulk cash for business and to encourage the general public to use the non-cash modes for transaction settlement, the Bank of Ghana in July 2013 issued a directive to set the limit on third-party cheque payments (payees other than account holders) over-the-counter to ten thousand Ghana cedis (GH¢10,000). This was later reduced to the prevailing five thousand Ghana Cedis (GH¢5,000) threshold since January 2014.
The directive changed the then free-for-all practice of no limit on third-party cheques. Banks and the public (customers) largely comply with this directive while the issuance of dud cheques is a punishable offence. For many reasons, no limit has ever been placed on the amount of physical cash that account-holders’(customers) themselves can withdraw directly over-the-counter. By that, many customers continue to withdraw huge sums of money for their daily transactions.
We consider the case of a branch manager whose customer called him to make GH¢500,000 available over-the-counter on the following day for his business transactions. Though the manager advised the customer to reason with him (the manager) to transfer the money to any third-parties, the customer preferred to take the bulk cash – hence, he went to the bank with his driver for the cash. This is a customer who is savvy and can conveniently use any of the alternative payment systems, but is unwilling to do so for personal reasons not identified with their related risks which can be managed.
We have also witnessed incidents where customers withdraw large sums of money over-the-counter to buy cars on the open market or for related activities. It is also true that there are instances when customers are willing to pay for goods and services etc. through bank transfers or other non-cash channels, but the third-parties (even those with bank accounts) rather insist on physical cash. Many of such transactions characterise our payment system and can be described as attitudinal bottlenecks (not necessarily based on lack of trust) which can be resolved through appropriate measures.
Indeed, the government of Ghana and Bank of Ghana, (through the Ghana Interbank Payment and Settlement Systems) have been championing the use of non-cash modes for transaction settlements. To move with the tides, banks have also made huge capital investments in the digital channels over the years and encourage (cross-sell to) customers to use them alongside the negotiable instruments (cheque etc.); but as we say, traditions die hard. Consequently, customers holding relatively big sums of physical cash withdrawals have been victims of armed robbery attacks. We heard the case of a Lebanese businessman who was killed by armed robbers after he had withdrawn GH¢200,000 from a bank in Tema.
The reports are many, with the most recent one being the gentleman who withdrew Gh¢14,000 from a bank in Tema and was robbed thereafter. Thanks to the neighbouring CCTV (video surveillance), the suspects were apprehended. This trend of events has established that the criminals’ modus operandi involves entering banking halls under the pretext of making enquiries or waiting for another customer yet to come, but with the criminal intention of relaying information on customers that are withdrawing large sums to their accomplices outside the banking halls.
Alas! They rob those customers at gunpoint after they have left the banks’ premises. Considering the amounts involved, you will agree with me that the victims were going to use them to pay third-parties – a transaction that can easily be done on their behalf by the bank. At least, many individuals/customers or merchants now use MoMo (mobile money services) linked to their bank accounts. Banks will continue advising customers to use other non-cash payment methods and making no or low charges to reduce huge cash withdrawals over-the-counter – but the decision rests with the customers, at least for now.
Over-the-counter Cash Withdrawals
As we have noted, there is no regulatory directive that limits the amount of cash an account-holder can withdraw directly over-the-counter. At best, we agree with customers on the expected amounts and frequency (daily/monthly) of such withdrawals at the time of opening the bank account. This helps to honour the customers’ mandate and monitor activity on the account. From now, the conversation between the regulator and the players in the banking industry should move toward setting a limit on over-the-counter cash (amount) withdrawals for individuals or businesses depending on the circumstances.
A directive of that sort should also define the range of goods or services customers are obliged to use transfers or other payment channels to pay for. That way, it will become a binding force to discourage customers from withdrawing huge amounts of bulk cash over-the-counter for expenses. Many will express the opinion that setting a limit on the amount of physical cash transactions over-the-counter will be untenable and resisted by the public, especially the illiterate customers or those who are not digital-savvy. But as a principle and practice in banking, banks serve as a customer’s agent to facilitate transfers to third-parties. When we define the parameters to the understanding of the general public, customers will be bound to engage their banks to play the agency role for them; hence, huge sums of money will not be withdrawn over-the-counter and into hands of armed robbers.
Your comments are welcome. Thank you for reading. Have a blessed time. God bless You.