The Nation Newspaper

Tag: Bank Charges

  • What manner of bank charges?

    SIR: Often we are told of the advantages of cultivating a savings culture. But with dwindling purchasing power due to inflationary trends that leave you with practically nothing to save, our banks are coming up with promotional offers that offer depositors mouth watering gifts, all in a bid to lure them to open accounts. Also, the cashless policy which practically forbids cash transactions with concomitant  fines  for  high volume cash transactions has egged many people, not least employees  at all levels to open bank accounts. And of course, the new rave – digital banking.

    With it you can send and receive money to /from anybody in any part of the country in a jiffy, as well as purchase items on line. This has made it compulsory for virtually everybody to get an automated teller machine (ATM) card better known as a debit card. With it even students, the unemployed and semi-literate can easily get people to ‘dash’ them money by simply paying it into their bank accounts and then going to withdraw it at anytime with their ATM.

    Alas, the convenience and comfort of modern day digital banking comes with a cost that is making many people, especially the average Nigerian, long for the good old days of cash transactions when they could get their salary or gift money intact.  The cost comes with the plethora of bank charges associated with internet/telephone banking and compulsory use of your ATM.

    Consider that for every text message notification sent you, for each of your transaction, whether debit or credit, the bank charges you N10 instead of the N4 recommended by the Central Bank of Nigeria (CBN).  And for each transaction, they send you two text messages consecutively – one notifying you of the successful transfer (debit) and another notifying you of a N52 tax on it. Surprisingly, even for buying recharge cards you are charged for the message! For example I have an account I pay some money into and  all I do with it is buy recharge card for my phone.

    However, once in a while I receive messages from the bank intimating me that X amount has been deducted from the account for messages.  Once when I phoned the Nigeria Communications Commission to complain of being charged money for buying recharge cards through the bank and I was advised to take up the issue with the bank.

    When I called inquiring as to the deductions, they could not give me any reasonable explanation except to say that money has to be charged for text messages sent me in respect of that.

    Now when you transfer money to someone, the banks charge you for doing so. When that person goes to withdraw the money, the bank charges him/her for that action. At the end of it you find that the money sent is actually reduced.   In order for the recipient to receive the actual cash equivalent you have to add something to the real cash amount, taking into consideration, the anticipated bank charges which you now pay in additions to the actual cash amount you wish to give the person. Thus while the person withdraws the actual amount, the extra you topped on it will be deducted subsequently by the bank by way of text and other bank charges.

    Whereas our financial institutions are quick to deduct customers’ money for their plethora of bank charges including text messages, they are reluctant to pay interests on deposits; not even  provide toll free telephone lines for customers’ queries.

    Consider these multiplicity of charges by our banks, namely, N10 for every debit/credit alert they send to us, N1000 every year for the ATM card they issue to us, 65 kobo each time we use our ATM card in other banks, N100 for every transfer to other bank accounts we make with the card, N3,000 for security tokens they give us for internet banking; N50 stamp duty charge for every transaction of N1000 and above made via electronic transfer or cash/cheque book; then there is the “transaction maintenance fee of N1 per  N1000 on all debit transactions carried out on current accounts”. They also charge monthly ATM fee of N52.50. These are in addition to value added tax (VAT) and withholding tax.

    Why are our banks so profit-minded?

     

    • Victoria Ngozi Ikeano, vikeano@yahoo.co.uk.

  • Nigerian saves N228b from bank charges, stoppage of ghost workers, says Buhari

    THE Federal Government has saved over N120 billion from the stoppage of ghost workers and another N108 billion from bank charges due to implementation of the Treasury Single Account (TSA), President Muhammadu Buhari said yesterday.

    He spoke at the conferment of the National Productivity Order of Merit Award on 15 Nigerians and five companies, including the Head of the Civil Service of the Federation, Winifred Oyo-Ita.

    The President said programmes put in place by his administration has begun to yield fruits as shown in the decline of the rate of inflation to 12.5 per cent as at May 14.

    He explained that the recession in 2016 was as a result of the over-dependence on a single commodity and the unprecedented looting of the nation’s treasury.

    He added that the challenge before the government was how to sustain the recovery and ensure growth.

    Buhari said: “As you are already aware, our country recently witnessed a tough economic period of recession attributed mainly to over-dependence on a single export commodity as well as the unprecedented looting of the treasury. With our determined efforts, we were able to exit recession. The challenge before us now is how to sustain the recovery and ensure growth.

    “The Economic Recovery and Growth plan (ERGP) of this administration targets a seven per cent growth rate by 2020, driven by strong non-oil sector growth in agriculture, solid minerals, manufacturing, information technology and services.

    “Our aim is to change our narratives from an import dependent, consumption-driven and undiversified economy to a producing nation where we grow what we eat and consume what we make. Our effort in this regard is beginning to pay off as most indices by which an economy could be measured are looking bright.

    “Our foreign reserve has risen to $47 billion as at April 9, 2018 as against $29.6 billion in May 2015. The inflation rate had dropped to 12.5 per cent as at May 14, 2018, making it the 15th consecutive month of fall. The implementation of the Treasury Single Account (ISA) has stopped the pilfering of the treasury.”

    The president added: “Some N108 billion has been saved from bank charges. Over N120 billion has also been saved from the elimination of ghost workers in the public service. We have also made steady progress in our diversification programme, especially in agriculture and mining.

    “The goal of this administration is to move Nigeria forward to become a strong, strategic and proactive state through a deliberate, pragmatic and productivity conscious programme of action.

    “We want to rebuild Nigeria into a competitive, virile, strong and productive economy; a state whose citizens are creative, innovative, responsive, accountable, incorruptible, patriotic and diligent.

    “The public service as the organ of government responsible for the formulation and implementation of government policies has a critical role to play in this new dispensation. Government will hold the public servants collectively and individually responsible for the planning and implementation of its programmes.”

    He said his administration was committed to rewarding hard work and excellence.

    “It is in this regard that we have placed great premium on the National Productivity Order of Merit (N POM) Award as an award of honour and dignity. We have, therefore, been consistent in the yearly conferment of the award on deserving Nigerians and organisations,” Buhari said.

    He said the government approved the conferment of the National Productivity Order of Merit Award for 2018 on 15 individuals and five organisations.

    He reminded Nigerians of the cardinal role of productivity to national economic growth.

    “There is need for every Nigerian to develop a productivity mindset for continuous improvement. This would ensure total recovery and sustainable growth in all sectors of the economy,” the President said.

    Minister of Labour and Employment Senator Chris NGIGE said a total of 327 Nigerians and 80 organisations have so far been conferred with the award since its inception in 1991.

    The minister said the nation’s developmental experience has so far proven that without higher level of productivity, the standard of living of Nigerians would remain abysmally low.

    The importance of productivity, Ngige said, was further underscored by the fact that the world is now a global village, where goods and services of other nations can easily be accessed.

    He said over the years, successive government in the country have attached great importance to improving the quality and quantity of goods and services available for consumption in Nigeria as a means of increasing total wealth.

     

     

  • Senate summons Emefiele, others over bank charges

    The Senate yesterday mandated its Committee on Banking to investigate alleged excess and arbitrary bank charges and illegal deductions by commercial banks.

    The Upper Chamber also resolved to summon the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, managing directors of commercial banks, forensic auditors and the Bankers Committee, with a view to harmonising and amending relevant banking laws, rules and guidelines that do not adequately protect the customers and remedy when overcharged.

    The Committee was specifically asked to conduct investigative hearing and thoroughly probe the CBN and commercial banks’ operational charges, with a view to finding an enduring solution to anomaly.

    The resolutions followed the consideration of a motion, entitled  “Urgent need to investigate, regularise and amend conflicting, vague and unjust remedies which the Central Bank of Nigeria offers to victims of excess and arbitrary bank charges and illegal deductions by commercial banks.”

    The motion sponsored by Senator Magnus Ngei Abe (Rivers South East) had 22 others as co-sponsors.

    Abe, in his lead debate, said that over the years, commercial banks in the country have indulged in sharp practices of over charging customers/depositors arbitrarily and excessively contrary to tariff stipulations, credit and monetary guidelines issued from time to time by the CBN.

    He said: “If this trend is allowed to continue unabated, Nigerians will be worse of for it, while the commercial banks will continue to declare huge profits at the expense of innocent Nigerians from regular depositors to business firms.”

    The lawmaker said that he is aware that the CBN on the 20th February reported that it had recovered about N2.6bn from banks as excess charges imposed on their customers in 2015 through a statement issued  by the Director, Corporate Communications Department Muazu Ibrahim.

    Abe said that in 2015 alone, the apex bank investigated about 6000 of such cases.

    He expressed concern that several of the Central Bank of Nigeria applicable rules that should remedy such hardship and discourage sharp practices by the commercial banks are conflicting, vague and unjust. There by causing the commercial banks to frequently short change their customers;

    He added that requests made by Bank Customers to the Central Bank of Nigeria for clarification of the rules are largely ignored.

    The lawmaker expressed worry that “if this trend is allowed to continue unabated, Nigerians will be worse of for it, while the commercial banks will continue to declare huge profits at the expense of innocent Nigerians from regular depositors to business firms.”

  • Why CBN made U-turn on new bank charges

    Why CBN made U-turn on new bank charges

    Three weeks into the implementation of the new bank charges for cash deposit and withdrawals, the Central Bank of Nigeria (CBN) at the weekend announced a reversal of the policy in what inside sources said was informed by the need to carry out more stakeholder engagement, reports Bukola Aroloye

    Bank customers who are used to hauling cash around can continue to enjoy that luxury, at least for now. Of course, they owe their good fortune to the magnanimity of the Central Bank of Nigeria (CBN).

    This is because the CBN at the weekend suspended its earlier directive on the implementation of cashless policy.

    In a circular released by the apex bank, it instructed banks to revert to old charges and refund customers who had been debited.

    The circular signed by Dipo Fatokun, director, banking and payments system department, CBN said the existing policy before the announcement of the new policy shall remain in place in Lagos, Ogun, Kano, Abia, Anambra, Rivers and Abuja.

    “You will recall that a directive was issued on the nationwide implementation of the cashless policy vide our circulars with reference numbers BPS/DIR/GEN/CIR/04/001 dated February 21 and BPS/DIR/GEN/CIR/04/002 dated March 16,” the circular read.

    “Please note that the new withdrawal and deposit processing fee charges above the threshold, as contained in the circulars referenced above, are hereby suspended until further notice. The position of the policy shall now revert to the status quo ante.”

    “The new policy already applied effective April 1, 2017 as contained in the circulars in reference above should be reversed and the old charges be applied. All necessary refunds should be made accordingly.”

    Reason behind reversal

    Although there is no official position as to why the CBN made a volte face, independent investigation by The Nation at the weekend revealed that the decision to backpedal on the policy was informed by a combination of factors, chief among which was to allow for proper briefing of all stakeholders concerned.

    The Nation was reliably informed by top sources at the CBN that there have been strident calls by all concerned for the apex bank to discountenance the whole idea from the outset.

    Specifically, the insider source who asked not to be named because of the sensitive nature of the issue revealed that “The regulator was almost being blackmailed by some interest groups, most of whom felt they were not carried along in the scheme of things and in order not to look insensitive, the next best thing to do after taken all the complaints on board was to simply have a rethink while allowing for more stakeholder engagement.”

    Expatiating, another source said: “The complaints from nearly all the stakeholder groups was that we needed to do more sensitisation and after considering the strategic environmental assessment of the policy, we thought it was the best thing we could do under the circumstance.”

    The sources reiterated that it is to correct the negative perception of the bank’s operations that largely informed the decision to return to status quo.

    Memo announcing the new mandate

    It may be recalled that the apex bank had issued a directive to banks last February to begin the implementation of reintroduction of new bank charges for cash deposit and withdrawals effective from April 1, 2017.

    In a circular announcing the new charges, Mr. Dipo Fatokun, Director, Banking and Payment System Department, CBN said: “Charges for cash deposit by individuals are as follows: Less than N500,000, zero charge; from N500,000 to N1 million, 1.5 per cent; from N1 million to N5 million, two per cent charge; above N5million, 3 per cent charge.

    “Charges for cash withdrawal by individuals are as follows: Less than N500,000, zero charge; From N500,000 to N1 million, two per cent; from N1 million to N5 million, 3 per cent charge; above N5 million, 7.5 per cent charge.

    “Charges for corporate cash deposit are as follow: Less than N3 million, zero charge; from N3 million to N10 million, two per cent; from N10 million to N40 million, three per cent; above N40 million, five per cent.

    “Charges for corporate cash withdrawal are as follows: Less than N3 million, zero charge; from N3 million to N10 million, five per cent; from N10 million to N40 million, 7.5 per cent; above N40 million, 10 per cent.”

    Resounding support for policy

    Speaking with a cross-section of economic and financial experts who understand the workings of the policy they argued that the initiative was ideal for the nation, especially considering the propensity of some unscrupulous individuals to abuse the system.

    In the view of Johnson Chukwu, Managing Director /CEO, Cowry Asset Management Limited, “The imposition of penalties on cash withdrawals and deposits above N500,000.00 are meant to discourage people for continuing to transact their businesses with cash.”

    Giving further insight, he said: “The discrimination in the penal charge where deposits above N500,000.00 attract only 1.5% charge while withdrawals of amounts exceeding N500,000.00 is penalised by a charge of 7.5% must have be designed with the intention not to deter completely depositing of such funds so that they are not left outside the banking industry.”

    Expatiating, he said: “I believe that without either sanctions or incentives it will be difficult to persuade Nigerians to change their habit of transactions businesses with cash hence the imposition of penalties on cash withdrawals and deposits. Nevertheless, I will also suggest that the approach to encouraging the adoption of the cashless policy should include incentives (carrots) and not just sanctions (sticks). That way, the Central Bank will be able to attract more willing adopters of the policy.”

    The imposition of penalties on withdrawals and deposits, he further reiterated, will certainly compel people to start using alternative means of payment such as cheques, POS terminals, on-lines, etc.

    All these alternatives, he maintained, are part of the cashless policy initiatives of the CBN.

    To him, “Any policy that compels people to use banking facilities such as the penalties imposed on cash withdrawals and deposits is certainly to the advantage of financial inclusion as it will encourage more people to open and operate bank accounts. Secondly, the policy will help to improve the effectiveness of monetary policies as it will reduce the amount of cash outside the banking system.”

    Echoing similar sentiments, Sola Oni, Managing Director, Sofunix Investment and Communications Limited, said: “The question of justification of the charges rolled out as penalties for exceeding cash withdrawal limit by the Central Bank of Nigeria (CBN) is relative. If the charges are lower, they still constitute penalties. The philosophy is to discourage mass cash transaction and leverage on the use of credit or electronic card.”

    The policy, he stressed, will encourage the use of digital transfer of money and thereby boost cashless model of transaction nationwide.

    He was however quick to admit that: “Against the backdrop that many Nigerians are not computer literate, it may pose a threat to financial inclusion as digital money transfer and its allied methods require a fair knowledge of computer.

    In the short run, it may discourage financial inclusion but in the long run it would enhance it.”

    Waxing philosophical, Oni said: “There is no policy that can favour everyone. The key issue is the benefits to the overall economy.”

    While making allusion to the early days of the introduction of mobile phone, he said: “Today, many people that are not used to mobile phone by virtue of lack of education are now embracing it as a means of communication. Cashless economy reduces crime, it is faster and quite convenient. But It also has its drawbacks such as identity theft among others.”

    Welter of criticism against the policy

    Not a few people are convinced that the new policy regime by the CBN is a well thought out initiative.

    One of those who have expressed serious misgivings against the policy is the president of the National Association of Nigerian Traders, Barrister Ken Ukaoha.

    Raising some posers, he queried: “What has changed between the last time the CBN suspended this move and now.”

    Ukaoha pointed out that banks traditionally charge commissions on transactions (COTs) on lodgments into and withdrawals from current accounts.

    Nigerian banks, he said, have with CBN’s tacit approval, been imposing on their customers similar COTs for withdrawals from savings accounts, “cash handling charges” for withdrawals of N1m and above, and other inexplicable and unjust charges.

    “So, what ‘cost of cash management’ does the CBN refer to?” he asked.

    He said the CBN’s drive to make the Nigerian economy cashless must be considered within the prism  of what foundations exist in Nigeria.

    “What is the level of literacy and acquaintance with information communication technology (ICT) among Nigerians? How many Nigerians can use electronic banking services? How many Igbo traders, Fulani herdsmen, market women, farmers, etc are knowledgeable in ICT?”

    Mrs. Uju Ogubunka, a financial and management consultant is also on the same page with Ukuoha.

    She faulted the CBN for approving the new charges for deposit money banks, saying they were not set up to impose such charges on their customers.

    “Some of us feel strongly that it is not right for banks to charge their customers,” Mrs. Ogubunka, who is also the President, Bank Customers Association of Nigeria, BCAN, said.

    She added that it is wrong to charge bank customers on deposits or withdrawals, especially with CBN drive to achieve financial inclusion.

    The BCAN boss, who is a former Registrar, Chartered Institute of Bankers of Nigeria, CIBN, said charging customers for deposits or withdrawals would actually encourage more customers not to embrace the banking culture.

    “With multiple charges, bank customers would prefer to withdraw their money and keep at home for other activities,” she said.

    Ade Olumide, a businessman in Lagos said the timing of the policy was wrong considering the economic situation in the country.

    “The new policy is uncalled for with the present economy of the country. We are doing the right thing at the wrong time. I am a businessman and my type of business is SME and we borrow huge money from banks to carry out our activities, this policy will have adverse effect on us,” Olumide lamented.

    Also speaking on the development, Mrs Ebere Oluchi said it would discourage customers from seeking bank facilities.

    “Personally, I believe those charges are not right, especially when CBN is talking about financial inclusion and financial literacy.

    “The importance of finance inclusion is to bring more customers into the saving culture; with reintroduction of charges, it might discourage depositors and those seeking other banking facilities,” she said.

    “It will be easy to control illicit funds that go to kidnappers, especially. To me, it is a good development,” she said.

    Amodu Adeyemi in Ikorodu said the policy was a welcome development, adding that it would reduce movement of cash.

    “It will help to check unnecessary withdrawals, people will only withdraw money when it is necessary.”

    Mrs Yemi Adenuga ex banker the reintroduction of cashless charges, which commenced April 1, 2017, in Lagos and six states including the Federal Capital Territory (FCT) is coming too early in the life of the policy.

    “The time frame to adjust to the change is too short. Awareness should be made highlighting the benefits of the policy,” she said.

  • What we don’t like about banks

    What we don’t like about banks

    So you have been working all day, and just out of intuition, you check the time and you realize it’s just about 20 minutes before your bank’s official closing hours. Ideally, it should not take more than 10 -15mins to finish your transactions, but because of financial and sometimes self-inflicted bottlenecks, you can’t make it. Well, asides from this here are a list of those things, most people don’t like about the Nigerian banking system.

    Bank charges

    Can you remember the first day you got a message about ATM maintenance fee? I bet you had the same reaction as mine. The only question I had on my mind that day was “Are they oiling my card or cleaning it for me in my dreams?” like seriously? Why should we pay for ATM maintenance?

    As if the above ATM fund stealing is not enough, the new CBN rule of 65 naira deduction is another very annoying thing we customers wish they could scrap. It’s not every time your bank ATM centers work, neither is it everyone that has their bank in close proximity to their house or place of work.

    I think the worst of all in all these charges is the fraudulent SMS charges. Yes fraudulent because they even charge dormant accounts money for giving bank statement that haven’t changed in months. As such they clear out your account without you knowing. Also with all the money they are making why are they charging us for sending alerts, as far as we customers are concerned the SMS alerts should be free. It’s the least they can do for us.

    Long queues

    I asked a friend last week “What do you hate most about banks?” She said “They have more customers than their capital and manpower; they can’t cater for the large crowd they desperately seek for.” Which is very true, there’s no month that goes by that doesn’t bring a bank marketer my way trying to convince me to open an account with them. I have so many banks accounts that I’m not using. The only thing connecting me to them is the monthly emails they send to me.

    This trend would have been forgivable of banks if they could accommodate us all, but unfortunately reverse is the case. Every time we visit banks, we always meet extremely long queues. I always laugh at my brothers expression each time he is sent to go pay money into the bank. You would think his whole world has come crashing down.

    Non functioning ATMS/ Bad ATM Service

    The automated teller machine at its inception was considered revolutionary in the country. It was supposed to be a life saver, well from the above ordeal of course. Unfortunately our ATMs haven’t lived up to expectation. I have visited several bank ATM centers with numerous ATM machines, that have only one machine functioning. Why have so many machines when you can only maintain one. As such the queues that the ATMs were supposed to alleviate are created at these centers. As if this is not enough, after queuing for so long, you get to the machine and “boom” it reads “temporarily unable to dispense cash”.

    This has to be the worst feeling ever. And sometimes that ruins everything the more it debits your accounts and it takes you weeks and sometimes months to get refunded. I guess this is the worst

    Poor Customer Service

    I think with all these issues, banks would have been more accommodating if they had nice and approachable staff rather than the usual “bored, grubby and frustrated” ones we see. You queue for so long only to meet a frowning cashier. You have an issue with your ATM card only to meet disinterested staffs who give you the “Can you not disturb my life” face.

    I’m sure am not the only one that hates these. I pray banks improve on these.

     

     

     

  • CBN to review Guide to Bank Charges

    The Central Bank of Nigeria (CBN) is set to review its Guide to Bank Charges. It is, therefore, asking for input from lenders and other financial institutions.

    The review is meant to address complaints arising from bank tariffs and other miscellaneous fees charged by banks on their customers’ accounts.

    The regulator said the guideline, which was issued to the industry several years ago is being reviewed to protect bank customers’interest.

    Its Director, Financial Policy and Regulation, U.A. Obot, said the new guide will cover areas neglected in the 2013 review.

    A CBN source said the apex bank is reviewing guidelines on bank charges and fees, as parts of efforts to bring down the cost of banking and financial services on customers.

    The CBN guide requires that bank customers will, from 2016, begin to enjoy free Commission on Turnover (COT) on all their transactions.

    According to the CBN, there have been complaints arising mainly from high bank tariffs, which it thinks could threaten confidence in the banking system.  It said in reviewing and updating the document on the charges, the CBN will be guided by, among other factors, those including considerations of financial inclusion, with particular emphasis on consumer protection, unit cost of banks, and contemporary developments in Nigeria’s banking industry.

    It lamented the practices in some banks, where products and services are deployed at exorbitant costs to the customers, saying the high costs have helped in discouraging many  people from assessing financial services.

    According to the apex bank, commercial and other banks need to be key partners in its drive for financial inclusion, even if for reasons of enlightened self-interest. In this context, there is need to take a different approach to bank charges and fees to customers.

    “Banks should bear financial inclusion considerations in mind in developing business models and products. While it is recognised that their unit costs are high, banks should avoid charges that can be perceived as predatory or extortionist and have the effect of excluding low-income customers or eroding the savings of depositors,” it said.