The National Bank of Rwanda (NBR) has ordered commercial banks to limit daily maximum cash withdrawals at Rwf5 million per individual in a move intended to curb fraud and money laundering, Business Times has learnt.
The new arrangement means that depositors can not withdraw, by cash any amount of money from their bank accounts as they may wish, but are accepted to deposit in excess of Rwf5 million by cash.
A source in one of the commercial banks said that it is in one way intended to encourage cheque and electronic card transactions.
“It is an order from the central bank. Our clients can either use cheques or electronic cards,” the source said.
The move is also seen as a planned measure to control cash movements into the economy as well providing liquidity to the banking system and the economy as a whole.
“It is not easy to monitor cash transactions in the economy,” the source said adding that, the new strategy can only help to re-establish liquidity in the banking system if much of the money is not withdrawn by other means.
The banking system is facing liquidity challenges which prompted the central bank during the first quarter of 2009, to introduce medium and long term refinancing facility to allow banking system to borrow liquidity from NBR for 3-12 months to address the problem of long term resources.
As a result of shortage of long term liquidity in the banking system, both deposits and lending rates increased during this year, fluctuating respectively around 10.5 percent and 17 percent by July, against six percent and 16.2 percent in the same period month last year.
Some members of the business community said that a limit on cash withdraw could in turn hinder deposits and trigger the operation of numerous bank accounts by the public.
By press time, a comment from the central bank could not be obtained.