Commercial Banks To Charge 0.05% On Foreign Withdrawal

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BY KAYODE TOKEDE, Lagos

Following increased foreign exchange daily withdrawal limits to $1,000, commercial banks are to charge customers 0.05 per cent, stipulated guideline by Central Bank of Nigeria (CBN) has revealed.

The apex bank in April had pegged banks commission on withdrawals from Domiciliary Accounts (whether savings or current account) at 0.05 per cent of transaction value or $10, whichever is lower.

In addressing transparency, the CBN said charges on various products and services that banks, other financial institutions and mobile payment operations offer to their customers needed to be reviewed.

So far, Guaranty Trust Bank Plc and Ecobank Nigeria have publically announced daily limits customers can spend on their naira MasterCard cards from $100 to $1,000.

With the growing stability in foreign exchange, as witnessed in the flows through the Investors & Exporters window, most of the Tier-I commercial banks have continued to access foreign exchange.

The managing director, Cowry Assets, Mr. Johnson Chukwu in a chat with LEADERSHIP at the weekend said, said banks’ daily limits spending might not be the primary objective of that increase.

He said: “Basically, what happens is that during summer, a lot of Nigerians travel outside the country and today they need to carry cash when they are travelling.

“So, by increasing the amount to $1,000 per month, what the banks are doing is that they are enhancing the ability of Nigerian travellers to use their cards for transactions outside the country.’’

He explained further that, “But more importantly, this shows improvement of dollar liquidity in the country. When they dropped to $100 in a month, it was because of CBN’s directive due to lack of foreign exchange liquidity in the country.

“We also know that the interbank market rate particularly Investors and Exporter Exchange window has almost made the parallel market to converge with the official rate at N360 while the parallel market is N365 and that is about the same rate the bank will commit expenditure to.

“The risk that they will not get the liquidity to fund it has reduced and that is why we are seeing the improvement.”

GTBank in a statement sent to LEADERSHIP said, “We increased spend limit to $1,000 monthly (this monthly limit can be used up in a day). We are unable to extend the use of the card for cash withdrawals via Automated Teller Machines (ATMs) due to the cost of settling ATM withdrawals, which customers might be unable to bear.

“Therefore, the Naira MasterCard can only be used for international transactions via Point on Sales (PoS) and online. The bank’s decision to increase the limit at this time is, amongst others, in reaction to the relative improvement in foreign exchange liquidity in the market, as witnessed in the flows through the Investors & Exporters window.

“This is the window through which the Bank can source foreign exchange for settling foreign exchange transactions on cards. This has been done more to improve the value proposition of the Naira MasterCard than from an income perspective.”

Also, Ecobank Nigeria has announced the availability of its Naira denominated MasterCard for international transactions as well as increased daily limits customers can spend on their cards. The financial institution said, “With the upwards review  daily spending limits currently applicable for customers using its naira MasterCard for international payments on Point of Sale (PoS) and online channels increased from $100 to $1,000 for its platinum card customers.

“It also set $750 and $300 limits for its gold and standard card holders respectively. In Addition to that they have also enabled $100 daily ATM cash withdrawals on all the card variants.”

The Central Bank of Nigeria (CBN) had said it sold a total of $2.64 billion to authorized dealers in May 2017. The apex bank in its economy report for May said it indicated 70.8 per cent and 106.1 per cent increase above the levels in the preceding month and the corresponding period of 2016, respectively.

According to the CBN’s report, “The development was attributed to the increase in inter-bank sales, matured forwards contracts and Bureau De Change (BDC) sales during the review period.

“Of the aggregate sales, forwards contracts disbursed at maturity were valued at $1.85 billion or 70.1 per cent of the total, while inter-bank sales amounted to $0.65 billion or 24.7 per cent. The balance of $0.14 billion or 5.2 per cent of the total was accounted for by sales to BDC.