Understanding Bank Charges Approved By CBN

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BY KAYODE TOKEDE

Early this year, the Central Bank of Nigeria (CBN) reviewed its guide on charges on various products and services by Deposit Money Banks (DMB), other financial institutions and mobile payment operators offer to their customers. The CBN’s newly introduced guide came into conclusion after extensive consultation with market stakeholders over some superfluous charges and disparity between operators and customers.

According to CBN, the guide was expected to enhance flexibility, transparency and competition in the Nigerian banking industry as operators are meant to negotiate with customers before charging them.

The director, Financial Policy and Regulation Department, Kevin Amugo said the reviews guide provides for charges on various products and services that banks, other financial institutions and mobile payment operators offer to their customers. Banks, other financial institutions and mobile payment operators are required to present any other product, service and/or charge not covered by this guide to the CBN for prior written approval.”

Finance experts said till date, most of the customers of these financial institutions are not aware of some of the negotiable charges as stipulated in the guideline and they are taking advantage of it. They blamed the poor state of ignorance despite financial institutions and apex bank’s effort to sanitize the sector with unjustifiable charges.

For the current account holders, the CBN in its guideline said Current Account Maintenance Fee (CAMF) will be charged at a negotiable but subject to a maximum of N1 per mille when you initiate a transfer out of your account. CBN said customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank. “Note that CAMF is not applicable to Savings Account,” the guide explained.

For foreign exchange transfers out of customer accounts using swift, commercial banks are directed by CBN to charge their customers 0.5 per cent Commission on Turnover (COT) plus any other associated off shore transfer charges. It explained that if a customer transfers $1,000 from domiciliary accounts, banks are expected to charge customer $5.

The guideline stated that, “Withdrawals on domiciliary accounts attract a charge of 0.05 per cent of transaction value or $10 whichever is lower. This means they can’t charge you more than $10 for withdrawals. Bank drafts still remain the same at N300 and N500 from current and savings account respectively for account holders. It is N500 plus 0.1 per cent of draft value for non-customers Banks can also charge N100 flat as processing fee for purchase and sale of treasury bills for their customers.”

In a motive to drive transparent electronic charges, the CBN said new hardware tokens will cost a maximum of N3,500, while software tokens are free, banks will charge an Short Message Service (SMS) rate of not more than N4/SMS. According to the guide, SMS alert is mandatory. However, where a customer opts not to receive SMS alert, the customer should issue an indemnity (for losses that may arise as a result) to the bank.

The CBN also revealed that no bank should charge customers on Email notification.  Elaborating further, it said, “If you lost your hardware token and want it recovered, you will be expected to pay a maximum of N3, 500.  However, you bear the full cost only in the event of physical damage, loss of token or replacement after expiration Electronic fund transfers will now incur a charge of N50 if below N10 million. Transfers above N10 million will also cost N50 flat. RTGS transfers will cost N550.

“Banks are allowed to charge card maintenance fees at $20 per annum (or its equivalent) for foreign currency denominated debt/credit cards. Naira debit/credit cards will cost N50 monthly in card maintenance fees. Banks will also charge you N1,000 one-off charge for issuance of debit cards. If you lose the card and want it replaced it will also cost N1000 one-off.”

CBN stated that ‘On-us’ withdrawals refers to cash withdrawals from an ATM in any of the branches of your bank while ‘Not -on-us’ withdrawals refers to cash withdrawals using an ATM from your bank on an ATM of another bank.” The guide said, Not on-us charges is N65 after the third withdrawal within the same month and no charges applicable On-us withdrawal from the ATM.

The Central Bank of Nigeria (CBN) has reserved directive on the implementation of cashless policy. Besides, bank charges, the apex bank had revised existing policy on the nationwide implementation of the cashless.  The CBN instructed banks to revert to old charges and refund customers who had been debited. CBN had earlier announced new charges on deposit and withdrawals above a threshold of N500,000. The apex bank directed banks to charge five per cent and 10 per cent for deposits and withdrawals above N40m in the corporate category.

Director, Banking and Payment System Department, Mr. Dipo Fatokun had fixed 1.5 per cent and two per cent for deposits ranging from N500,000 and N1 million in the individual category. Fatokun said the existing policy before the announcement of the new policy shall remain in place in Lagos, Ogun, Kano, Abia, Anambra, Rivers and Abuja.

According to him, “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 old charges to be reverted to three per cent processing fee for withdrawals above N500,000 in the individual category and five per cent for withdrawals above N3 million. “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.”

When our correspondent contacted him via email on commercial banks faulting the CBN directive, he noted that customer that has not been refunded should contact his bank. He said “Any customer that has not been refunded should liaise with his bank, failing which such customers should report to Central Bank of Nigeria via [email protected] But banks that are found to have surcharged their customers would be sanctioned.”

However, bank customer must not forget the N50 stamp duty that was introduced by Federal government early in the year. This order was contained in a circular to all Deposit Money Banks and Other Financial institutions titled, Collection and Remittance of statutory charges on receipts of Nigeria Postal Service under the Stamp Duties Act”.

The circular said, Bank customers are to pay N50 stamp duty for money received into their accounts via electronic transfer, cash and cheques. One of the core functions of the CBN as enshrined in section 2(d) of the CBN Act 2007 is the promotion of a sound financial system in Nigeria. Implicit in this function is the promotion of the safety and stability of the financial system to among others, engender and sustain public confidence in it.

In furtherance of its statutory responsibility to promote confidence in the financial system, the CBN had over the years implemented a measure of consumer protection mainly in the form of customer complaint management.

While this arrangement served to protect the rights of consumers of financial products and services, it was limited in scope as it did not address the poor level of financial literacy of some consumers of banking products and services in Nigeria.