The Nation Newspaper

Tag: Excess

  • Banks’ excess charges

    Banks’ excess charges

    •Time to go beyond refunds

    The disclosure by the bankers professional body – the Chartered Institute of Bankers of Nigeria (CIBN) that it had caused a refund of not less than N22.98 billion and $16.9 million excess bank charges to petitioners and bank customers since its inception in 2001, although revealing, is unlikely to shock Nigerians. It is merely a window into the depth of the rot that has plagued and continues to plague a sector whose primary purpose is to help drive the economy.

    According to CIBN President, Prof Segun Ajibola, the body treated 1,889 petitions/cases with total claims of N320.4billion and $415million, of which 1,766 were resolved.  In other words, the refunds represent the proven excess bank charges by various banking institutions. We hope the outstanding complaints will equally be dealt with.

    We commend the CIBN for standing up for professionalism and pushing for appropriate restitutions on behalf of those cheated by the industry. Unfortunately, while most Nigerians can claim to be familiar with the role of the institute when it comes to enforcing the Code of Conduct among all cadres of employees in the banking industry, the same cannot be said of its role as a financial ombudsman with a mandate to adjudicate cases or petitions against banks on unethical practices and excess charges. In the likelihood of the number of petitions filed being only a tip of the iceberg, given the abysmal level of financial literacy in the country, we urge the body to do more to promote this aspect of its mandate to avail more Nigerians of avenues for redress, particularly where they have reasons to believe that they have been short-changed.

    On the whole, it must be admitted that the issue of excess bank charges has become an industry-wide challenge. Nothing appears exempt: ordinary cash transactions at the Automated Teller Machines (ATMs) are programmed to extract multiple charges that are hard to comprehend; there are charges for transaction notifications, for cheque books, and sundry charges – known only to the charging bank and often without prior notifications.

    Not even big corporations are spared of arbitrary charges –the bigger the volume of transactions the more the likelihood that the charges will take time to detect or resolve. In all, bank customers are reduced to a hapless, disempowered lot in an industry where they are supposed to be king. What makes it particularly confounding is that the same bank customers that are often denied access to credit; or when they are availed, at cut-throat interest rates, are the same victims of these numerous invisible charges.

    The CIBN has done well in seeking to rein in members who run afoul of the ethics of the profession. It has an additional duty to educate Nigerians on their rights and the avenues available for redress. It should also be time for stakeholders – the Central Bank of Nigeria (CBN), the Bankers Committee and the CIBN – to work together to address a problem that is increasingly becoming endemic.

    We recognise that the greater aspect of the challenge is regulatory. To the extent that the CBN has the bounden duty to ensure that the guidelines governing the operations of the financial services sector are well publicised, and also to ensure that they are strictly observed, the duty must come with the knowledge of sanctions in the event of infractions.  For, while the CIBN is right to move against its members found to have given their profession a bad name, there ought to be in equal measure, penalties from the regulator, for willful violations of the law.

    Above all, it would be a good idea for banks, under the direction of the CBN, to set up help desks to deal with such complaints.

  • Excess crude account down by $7b to $5b

    Excess crude account down by $7b to $5b

    Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi has said for Nigeria to beat the ingenuity of counterfeiters, there is a need to redesign the Naira.

    Sanusi also revealed that the Excess Crude Account is down by $7bn from $12billion to $5billion.

    Sanusi told the Jones Onyereri- headed House Committee on Banking and Currency yesterday that the “ noise” about the 5000 Naira notes was the reason the CBN shelved the plan, which, according to him, should be done every seven to eight years.

    The House brought the CBN and other stakeholders to an interactive session on three motions referred to the committee. The motions are: •the rising incidence of fake Naira being dispensed from Automated Teller Machines (ATMs); •the urgent need to stop banks from introducing N100 maintenance charges on ATM cards; and •need for a single digit interest rate to encourage small- scale investors.

    Sanusi said restructuring of the Naira would stop fake currency.

    He said: “One of the reasons we wanted to have a restructuring of the redesign of the currency a few months ago was because, as explained, many of our notes had been in existence for upward of eight or even ten years. Now best practice is that within a period of five to eight years, you redesign the currency because after that period counterfeiters tend to catch up. Even at that, Nigerian notes in terms of what we see as counterfeit and processing, the percentage is very low.”

    Giving the percentage of counterfeit notes per million, he said: “We had about 3.9 per million in 2007, 6 per million in 2008, 8.4 per million in 2009, 7.4 in 2010, 5.4 in 2011 and 8.4 per million in 2012 of the notes processed which were counterfeit.

    “But with ATM machines, it should not happen because it has been processed and we would be very pleased to know if there are specifics about any bank so that we can draw their attention on the importance of processing them before putting them in ATM machines.

    “Now, unfortunately, the redesign suffered because of all the noise around N5,000 and, therefore, it is being delayed because that is what would have made it impossible for counterfeiters to forge so they have to wait for another five, six, seven years before they learn how to counterfeit by which point , the CBN should be redesigning the notes again.

    “So I suppose that at some point the country would have to revisit the issue of redesigning the notes but at the moment, based on popular demands, we have had to step down the redesign.”

    On interest rates, the CBN governor said delivering a low rate of interest is the easiest thing for the apex bank “because the CBN prints money and interest rates come down when you have a lot of money and that is not a problem.”

    “If you want interest rates of 2 per cent, it is not a problem; we simply double and triple the money supply in the system.”

    He, however, said that was not the way to go.

    Sanusi said a weak currency shoots up import and banks may not be lending to the real sector for other reasons, apart from interest rates. Other things to consider, according to the CBN boss, are power, security, storages, credit records and customer identification, amongst others.

    “ When MPR was at 8 percent, how much were being lent to manufacturers? It was going to shares and oil marketers,” he said.

    The CBN governor said there was need to attract foreign exchange because the country is import dependent. “In the current environment, the likelihood of rates going down is very low. It is more likely to go up,” he said.

    Sanusi gave the solution to the problem as reduction in government domestic borrowing, completing reforms in the power and petroleum sectors, ensuring security and providing infrastructure that will attract foreign investment and stimulate domestic business.

    He revealed that the Excess Crude Account is down from $12 billion to $5 billion because the economy is import dependent and money had to be moved to balance the budget.

    Sanusi warned that there are economic postulations that oil may likely sell for as low as $60 and that there is need for the country to diversify, if the government keeps borrowing at the between 13 to 14 per cent and keeps increasing the budget deficit, the country may be in trouble.