Amechi Ogbonna
A recent policy decision by the Central Bank of Nigeria (CBN) to cut charges on cash withdrawals from other banks’ Automated Teller Machines (ATM), from N65 to N35, and other services from January 2020, really stands out as one of the most pragmatic steps it had taken lately to soothe the pains of the business community.
But while the review appears to be quite a relief to bank customers, what seems to be of concern at the moment is the ability of banks to fully comply with the provisions of the guidelines by not capitalising on the naivety of non-numerate depositors to cheat and thus breach the policy objective.
Before the rate cut by the apex bank, there were glaring indications that rising charges for use of electronic channels were beginning to threaten the confidence customers have in the nation’s financial system.
Such sentiment its was observed had strong implications on the financial inclusion and literacy programme for which the CBN and other stakeholders had committed to fully implementing.
This is because prior to the latest reviews, most bank customers were already becoming apprehensive about rising bank charges to the extent many opted to suspend the use of their debit cards for particular transactions, including fuel and other purchases just to avoid paying an extra N50 demanded by the merchants.
But in a fresh guideline to banks and other finance institutions which replaces the Guide to Charges by Banks and Other Financial Institutions issued in 2017 and which took effect from January 1, 2020, the CBN apparently removed a big log on the eyes of bank customers by reducing a number of service charges with a proviso for further reviews from time to time to reflect changes in the business environment.
Indeed, there is no gainsaying it that times are hard for majority of Nigerian bank customers such that every kobo in their account has began to count and any arbitrary charges by whatever guise could be viewed with seriousness.
According to the CBN, the reduction in key transaction charges came off growing public outcry of bank customers against the multiplicity and value of the charges, and being part of an effort to make financial services more accessible and affordable to customers.
The bank also said that the objective of the new guidelines, was to ensure fair treatment of customers, to enhance disclosure and transparency in bank- customer relations, and achieve responsible business conduct, while strengthening complaints handling and redress processes in accordance with its stipulated timeframe.
The bank had expressed optimism that its decision would further strengthen the waning customer’ confidence in the financial services industry, promote financial stability, growth and innovation.
For its Customer Protection Department, the downward review of the charges offers a new vista of opportunity to assert its commitment to protecting customers from/against unfair and exploitative practices by financial institutions and contain rising unethical and predatory practices that undermine consumer confidence in the use of financial products and services.
The bank expects it would be able to check the penchant for most service providers to give inadequate and misleading information and/or failure to disclose material information that often lead to arbitrary debits on customer deposits.
CBN’s Director, Corporate Communications, Isaac Okorafor, gave the highlights of the new Guide to include removal of Card Maintenance Fee (CAMF) on all cards linked to current accounts, as a maximum of one Naira per million can be charged for customer induced debit transactions to third parties and transfers or lodgments to the customers’ account in other bank on current accounts only.
Part of this review includes the reduction in Advanced Payment Guarantee (APG) now pegged at one per cent (1%) of the APG value in the first year and 0.5 per cent for subsequent years on contingent liabilities. The new guide stipulates that a one-off charge of N1,000 would apply to the issuance of cards, irrespective of card type (regular or premium), which also applies to customer debit cards replacement requests.
Under the guideline, the current NIP charges will apply to use of Unstructured Supplementary Service Data (USSD), purchase with cash-back will attract a charge of N100 per N20,000 subject to cumulative N60,000 daily withdrawal.
For cards linked to savings account, a maintenance fee has been reduced to N50 per quarter from N50 per month amounting to N200 annually instead of N600, while requests by customers for documents (like confirmation letter, letter of non-indebtedness and reference letter) will now attract N500 per request, Account Maintenance Fee (CAMF), will only be applicable to current accounts and not Savings Accounts.
However, in order to guard against excesses of financial institutions, the banking regulator warned also that unapproved or arbitrary charges by banks and other financial institutions, will henceforth attract a penalty of N2 million per infraction or as may be determined by the CBN from time to time for financial institutions that breach any provision of the guide, adding that noncompliance by banks with the directives in terms of infractions attracts N2million daily until the directive is complied with or as may be determined by the CBN from time to time. It therefore directed banks to log every complaint received from their customers into the Consumer Complaints Management System (CCMS) as failure to do so will attract N1million per breach.
In a similar vein, the cost to either obtain a new hardware token or a replacement is reduced from N3,500 to N2,500.
For charges for Bills payment (including bills payment through other E-channels) payment has been reduced to a maximum of N500 (negotiable) per beneficiary from N1,200.
Charges on electronic funds transfer have been reviewed to N10 on transaction below N5,000, N25 on transaction between N5,001 – N50,000 and N50 on transaction above N50,000.
Charges on foreign currency denominated debit/credit card have been reduced to $10 per annum from $20 per annum.
However, transactions’ alert on consumer-induced transactions remain (N4) while no charge for bank-induced transactions.
The CBN also removed Card Maintenance Fee on all cards linked to current accounts and also instructed banks to charge a maximum of N1 per mille for customer induced debit transactions to third parties, and transfers or lodgments to the customers’ account in other banks on current accounts only.
Although an end may not have come for spurious charges and feasting of most lenders on their hapless customers’ accounts, it has become imperative for the CBN to be more proactive in its oversight responsibilities to guard against some hawkish vendors capitalising on depositors’ ignorance to rip them off with dubious debits.
It was perhaps in appreciation of the policy of downward review of banking charges, that the Minister of Communications and Digital Economy, Isa Pantami, for instance, hailed the CBN’s decision to slash withdrawal fees charged by banks after the third withdrawals from Automated Teller Machines (ATM).
The minister in a statement by his spokesman, Uwa Suleiman, said the fee reduction to N35 from N65 will drive the actualisation of a digital economy.
“Lower service charges will encourage higher patronage of electronic services, especially in the banking and financial services sector.” Pantami said
Also commenting on the new policy, Chairman of the House Committee on Banking and Currency, Victor Nwokolo, commended the CBN for responding to the House’s demand for its intervention in checkmating the excesses of commercial banks in the country.
He said, “Remember that there was a motion where the House mandated the committee to discuss with the CBN, to see how it could ameliorate and listen to the Nigerians who were complaining about the charges.
“So, what we are seeing today is due to commitment of the CBN Governor, Mr Godwin Emefiele and the interface with the National Assembly. Of course, Nigerians are happy. It is a welcome development. That shows you that with time, things will be better and the burden of charges on Nigerians will be reduced”.
For Nigerian lawmakers, the development would help reduce hardship in the country.
“Of course, the CBN and the governor are also listening to the yearnings of Nigerians. As Nigerians were complaining to the National Assembly, they were also writing on social media and through you (the media). So the response by the CBN was due to everybody’s contribution. In any case, it is a response to the demands by Nigerians.”
Meanwhile, for the Nigeria Employers’ Consultative Association (NECA), the Central Bank of Nigeria (CBN) deserves commendation for its new “Guide to Charges by Banks and other Financial Institutions”.
The Director General of NECA, Dr. Timothy Olawale, in a statement described the new Guideline as a welcome development in part, as it will make financial services more accessible and affordable to various stakeholders in the economy.
Olawale said “The Guideline will encourage Nigerians to align more with the cashless policy of the CBN”.
He commended the reduction in the remote-on-us fee (from other bank’s ATM) to a maximum of N35 from N65 after third withdrawal within the same month.
On electronic funds transfer, Dr. Olawale noted, “although the new guideline introduced new additions for transactions below N50,000, attracting N25 and N10 respectively, we suggest that transactions of N100,000 and below should fall within the newly reviewed charges of N25, taking into account the low -income earners.”
He drew the attention of the CBN to the Real Time Gross Settlement (RTGS) charge, which was reviewed upward from N750 for transaction of N500,000 and above to N950.
According to the NECA boss, “we are of the opinion that in the spirit of benevolence demonstrated by the CBN, if the charges cannot be reviewed downward to about N300, the status quo of N750 should subsist.”
While expressing hope for a successful implementation of the new Guidelines, he called for the total cancellation of N50 POS charge on Stamp Duty still in operation, stressing that the conspiracy of the N50 Stamp Duty charge is a burden on Nigerians and businesses as the citizens grapple under the weight of inflation and eroding purchasing power.
He argued that these charges, under any guise tend to further impoverish the banking populace.
His argument came as bank customers commended the Central Bank of Nigeria (CBN) for reviewing downward bank charges announced in December last year.
Some of the customers who spoke in Kano, expressed happiness over the policy.
Mallam Usman Baffa, a trader at Kwari market in the metropolis, for instance lamented that previous charges robbed depositors of so much at a time they could not help the situation., adding the recent review has addressed part of their complaints.