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Ending Excessive Bank Charges



Recently, the Central Bank of Nigeria (CBN) claimed to have recovered over N65billion as illegal charges wrongfully deducted from customers’ deposits and other transactions within the banking system. The apex bank said that the money was recovered from commercial banks and had since been refunded to the affected customers.

Excess bank charges have become a source of worry by bank customers as banks indulge themselves in excessively charging their customers fees under various guises. There have been several complaints from banks customers which cut across various issues, the CBN in most of its annual economic reports confirmed that most of the complaints bordered on ‘excess bank charges’.

There are different charges/fees approved by the CBN such as interest on deposit as well as interest rates/lending fees. Interest on deposit includes current account in credit balance, which has a ‘negotiable’ charge. Others are savings deposit account, term deposit account, domiciliary account, current account, savings account and deposits held on collateral. Charges on virtually all these accounts are classified as ‘negotiable’. Also, how much of negotiations the DMBs carry out with their customers before embarking on what has resulted in outrageous excess charges is better imagined. That the DMBs have also embarked on these excess charges in clear breach of extant provisions leaves much to be desired.

But there are multiplicities of other over charges by banks that no one is petitioning against because of the size of the amount, logistics and cost that will be involved in following them through. In the majority, these are small amounts ranging from say 50k for stamp duty to N4 telephone alert messages and ATM transaction-related charges that banks collect multiples of times without justifications. Banks do this because they know that no customer will leave other important things to be chasing insignificant amount of money in a bank.

The worst is even when some banks, at certain periods in a month, impose charges on all the customers for no known service rendered and against the provisions of the Guide to Bank Charges (a banking industry’s document that indicates what charges/fees banks can legitimately collect for services rendered) issued by CBN on behalf of the Bankers Committee.

It is such generally unauthorised levies that often deplete balances on savings accounts until they are thrown into debit, especially if the amount realised from the low rate of interest paid by banks on such accounts is inadequate to cover the charges. They also reduce credit and exacerbate existing debit balances in customers’ current accounts.

But despite the huge outcry against it, there are indications the banks appear to be continuing with the process unrestrained. While the widespread criticism that banks have received on the issue over the years was expected in some quarters to have resulted in a change of behaviour on their part, customers’ complaints of excess charges seem to be on the rise.

In most cases, excess charges are discovered by financial consultants who review the accounts majorly of borrowing customers of banks. And this happens mainly when the repayment of credit facilities by customers becomes suspect and questions become rife as to the make-up and correctness of huge outstanding debit balances in debtor-customers’ accounts. At that point some customers engage consultants who eventually discover that banks had taken more than what was due to them and are engaged to make refunds.

We condemn the practice of excess bank charges because it is not in line with global best practices in banking, especially as it is coming despite spirited efforts by the CBN to ensure the unbanked population is adequately captured under its financial inclusion policy. Why should dubious bankers go the extra-mile to fraudulently collect from customers excess charges not contained in the “Guide to Bank charges”, a manual designed to protect consumers of banking products and services.

This unwholesome  practice by banks has unsettling impact on businesses as some may have either gone bankrupt or closed shops on account of this illegality. Given the rising cases of these worrisome deductions by banks, against the statutory prescription, the CBN is advised to come out with stringent measures to stem the ugly tide.

We believe it is not enough for the CBN to recover excess charges, the apex bank must ensure that these breaches are not allowed. Above all, defaulting banks should be made to face serious sanctions, while more enlightenment campaigns should be put in place for bank customers.