With the revised guide on bank charges, customers have since the beginning of this month begun to enjoy the reduced charges as deposit money banks commenced implementation. BUKOLA IDOWU takes a look at the new charges and its impact.
Bank customers since the beginning of the year have had to pay way less than what they were being charged for transactions and some banking services in years past following the implementation of the revised Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions.
The revised guide had seen a major cut on the charges that bank customers have repeatedly complained against such as electronic transfers as well as the charges on remote-on-us Automated Teller Machine (ATM) transactions.
The CBN in a circular issued late last year ahead of the implementation of the new charges had said the revision of the charges was in response to further evolution in the financial industry over the past few years. It noted that the guide which was first released in 2004 and revised in 2013 and 2017 was in the light of market developments such as new innovations in products, channels and new industry participants.
There was also the inclusion of new sections on accountability, responsibility and a sanction regime to directly address instances of unapproved and arbitrary charges. The accountability session states that the “Executive Compliance Officers (ECO) shall monitor compliance with the requirements of this Guide and shall be held liable for any breach.
“The Head, Information Technology Division shall ensure that the name of all system related/generated/posted charges shall conform strictly to this Guide. The Head, Information Technology Division shall render monthly report attaching a schedule of all failed transactions on e-channels (ATM, PoS, mobile, web/internet and related channels) that originate or terminates in his bank, to the Director, Payments System Management and Consumer Protection Departments of the CBN.
“Details of all fees and charges applicable to a transaction shall be disclosed to the customer at the point of consummation (where applicable). Transaction receipt/alert/confirmation for any charge shall contain a description of the charge.”
Major Cuts In Charges
According to the guide, electronic transfers of N5,000 and below will have a N10 transaction cost plus VAT and transfers of above N5000 but below N50,000 now attract N25 charges plus VAT, while transfers above N50,000 will attract N50 charge plus VAT. The charges on electronic transfers had been cut from N50 which most banks have been charging.
A cut in bank charges had been one of the factors being canvassed for the country to be able to achieve its financial inclusion goals of the country. The CBN plans to achieve a financial inclusion target of 95 per cent by 2024.
CBN Deputy Governor, Financial System Stability, Aisha Ahmad had last year stated that efforts were being put in place to lower the cost of deploying services by banks through many service initiatives and some of these disruptions is actually helping us lower these costs. “Once more people are included, you would see better economic inclusion and you can have better growth,” she stated.
As against the N65 previously charged by banks after third withdrawals on remote-on-us ATM transactions, the CBN had insisted that banks do not charge above N35 per withdrawal. Also, maintenance charges on cards was cut from N600 spread through the year to N200, a N400 shave off from what card holders would have to pay banks on an annual basis.
Also maintenance charge for foreign currency card holders was also cut down to $10 or its equivalent from the previous charge of $20 yearly.
Other major changes in the charges include removal of Card Maintenance Fee (CAMF) on all cards linked to current accounts, a maximum of one naira per mille for customer induced debit transactions to third parties and transfers or lodgments to the customers’ account in other bank on current accounts only.
Other reductions include Advance Payment Guarantee (APG) which is now pegged at maximum of one per cent of the APG value in the first year and 0.5 per cent for subsequent years on contingent liabilities. The guideline also stipulates an interest rate minimum of 30 per cent of monetary Policy Rate (MPR) which is currently 13.5 p.a., around four per cent if a customer does not make more than four withdrawals in a month.
CBN Director, Corporate Communications, Mr. Isaac Okorafor explaining some of the major highlights of the new Guide to bank charges, stated that the new guide stipulates that a one-off charge of N1,000 applies to the issuance of cards, irrespective of card type (regular or premium).
The same one-off charge of N1,000 applies for the replacement of debit cards at the customer’s instance for lost or damaged cards. In the same vein, upon expiry of existing cards, customers are to pay the same one-off charge of N1,000 irrespective of card type. Conversely, no charge shall be required for pre-paid card loading/unloading.
He further explained that the current NIP (NIBBS Instant Payment) charges 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. Also, for cards linked to savings account, a maintenance fee has been reduced to a maximum of N50 per quarter from N50 per month amounting to only N200 per annum instead of N600.
He noted further that there will be no more charges for reactivation or closure of accounts such as savings, current and domiciliary accounts while status enquiry at the request of the customer (like confirmation letter, letter of non-indebtedness and reference letter) will now attract a fee of N500 per request.
On Current Account Maintenance Fee (CAMF), the Guide expressly stated that this would be applicable only to current accounts in respect of customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank. It emphasized that CAMF is not applicable to Savings Accounts.
According to Okoroafor, the CBN carried out the review of the Guide, which also prescribes charges permissible for Other Financial Institutions and non-bank financial institutions, in order to align with market developments.
Speaking with Sunday LEADERSHIP, some bank customers applauded the cut in charges even as they urged for more reduction in bank charges. According to Mr. Smart Chibuzo, an entrepreneur, said there is need for follow up and monitoring to ensure that banks comply with the new charges.
He commended the cut in charges saying the charges by banks had been a discouraging factor for him because “I will work and all my money will then be deducted by the bank for the charges.”
Mr. Pelumi Adenuga who also commended the cut in charges called for a further downward review, saying there is need to cut the charges down to zero, especially for the low income customers.
Although some customers say they are not aware of the cut in charges, Mrs Kemi Osho, a business woman said that it is very good as it will help her do more of transfer rather than coming to stand on the queue to deposit.
Mrs Juliet Abba, a business woman said “they are not supposed to charge us at all, that infact they are rubbing us, that why will they charge us for withdrawing from ATM? The people who are celebrating this are those who don’t know their right. Even the card maintenance fee shouldn’t be, what are they maintaining, after I have used N1,000 to collect card.”
Penalties For Non-compliance
The CBN had in the revised guide directed banks to log every complaint received from their customers into the Consumer Complaints Management System (CCMS) in addition to generating a unique reference code for each complaint lodged, which must be given to the customer.
Failure to log and provide the code to the customer, it added, amounts to a breach and is sanctionable with a penalty of N1 million per breach. The revised guide had also stipulated 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.
It said the charges prescribed in the Guide were arrived at after extensive consultations with stakeholders and is expected to enhance flexibility, transparency and competition in the Nigerian banking industry.
Impact On Banks
With the commencement of the implementation of the revised charges on January 1, 2020, some banks had sent out notices to their customers to intimate them of the new charges and analysts are foreseeing a reduction in the income of banks.
Reports have shown that Nigerian banks have increasingly generated income from electronic transactions which include electronic transfers, ATM charges, maintenance fees, USSD charges and other sundry charges. In 2018 about N124.5 billion revenue was generated from electronic transactions by 11 banks.
A breakdown of the audited 2018 yearly reports from 11 banks indicates that revenue from e-transactions in the banks increased by 43 per cent year-on-year, from the N86.72 billion acquired by the banks in 2017. However, with the drastic cut in charges, the amount of revenue form electronic transactions is bound to be reduced at the end of the 2020 financial year.