There is no gain saying the fact that banking sector is the nerve centre of any economic that aspires to stand tall among its global counterparts.
To this end, modern banking commenced in Nigeria in 1892 with ownership then dominated by foreigners. This contributed significantly to the inability of indigenous Nigerian entrepreneurs to secure bank credits.
In a bid to redress this situation and meet the financial requirements of Nigerian businesses, many indigenous entrepreneurs became involved in banking from the late 1920s to the mid-1950s. Some of these early indigenous banks included; African Banking Corporation (1892), Bank of British West Africa (1894), Anglo-African Bank (1899), Colonial Bank (1916), among others.
In addition, Economic Confidential findings revealed that the aim of every government is to provide basic services, leadership and to protect the interest of the entire citizens. For government to be able to achieve this it must have a sound financial planning. In a way, thegovernment and its citizens largely depend on loan from the banking sector to actualise their set objectives, which will in the long run have a positive effect on economy at large.
On the other hand, the real sector is a strategic component of an economy because it produces and distributes tangible goods and services required to satisfy aggregate demand in the economy.
For this reason, there is the need for adequate credit flow from the banking industry to the real sector, which in the Nigerian case; the credit flow has been grossly inadequate.
Report shows that instead of banks impacting positively on the real sector, they rather continue to make money from the larger society in cooked manner most of which is not in line with customers’ satisfaction.
The Central Bank of Nigeria, which is saddled with the responsibility of overseeing the affairs of the commercial banks, appears not to be helping matters.
Recently, the apex bank proposed neck breaking bank charges which stated that; N50 will be charged on every cheque leaflet obtained and used at the deposit money bank’s counter. This is not the same as the collection charge on cheques, which is also proposed to be “one per cent of cheque value or naira equivalent of $10 whichever is lower.”
The CBN had also started a N100-per-month charge on every debit card (your typical ATM card) – separate from the existing N65 charge after the third withdrawal within the same month. In its draft on the “guide to charges for banks and other financial institutions in Nigeria”, CBN also proposed a N4, 200-per-annum charge on foreign currency denominated cards as maintenance fee.
For naira dominated cards, a monthly maintenance fee of N100 was also proposed for every month a debit card is used (N1, 200 per annum), and a N50 charge for other months when card is used or not (N600 per annum).
The proposal is coming only 13 days after Nigerians protested excessive bank charges, declaring a ‘No Banking Day’ on March 1, 2016.
For foreign exchange related transactions, where Form M or Form A is needed to request forex from CBN, charges that were hitherto not applicable have now been proposed.
The CBN is proposing a charge of a N100 on Form A, which is used by students to apply for forex on school fees, medical bills, and travel allowances. Form M, which is predominantly used by manufacturers to import goods (not on the CBN prohibition list), is proposed to henceforth cost “N1, 000 in addition to maintenance fee on e-form platform in line with CBN directive.
The central bank also added that Nigerians could send in their comments on the proposed charges, seeking clarification and notifying the bank on excluded financial institutions.
It is currently reviewing the extant Guide to Bank Charges, which came into effect on April 1, 2013,” the circular, signed by Kevin Amugo, director financial policy and regulation department, read: “The review, in line with the philosophy of periodically ensuring that theprovisions of the guide accord with current realities, also seek to address complaints from customers of financial services, requests for clarification on provision of the guide and absence of a tariff regime for other financial institutions in Nigeria.”
Speaking to Economic Confidential on this issue, the president of Consumer Advocacy Foundation of Nigeria (CAFON), Ms Shola Salako, said: “For many years now, consumers of banking services have been subject to series of unsatisfactory services, transactions andcontractual terms. We have endured excessive charges, unexplainable fees and unfair contracts that only protect the banks but do not protect the consumers. Banks debit consumers’ accounts at will for charges we never agreed to or were not aware of; they charge us for everything; we pay to get our statements; introduction letters; debit cards, and now, some banks are charging N210 for the use of deposit and transfer forms in their branches!
“We have been victims of management and regulatory lapses resulting in many consumers losing their deposits in the banking crisis of the last two decades. Thousands of consumers have been victims of ATM fraud because the banking industry failed in its duty of care to educate and inform consumers of the inherent dangers in Online Banking atcommencement.”
According to her, some consumers are still unable to access their deposits due to botched BVN registrations because the banks did not take time to properly educate consumers on the process before implementation.
Continuing, she said: “These banks keep giving Nigerians unnecessary excuses, while they are not doing anything to impact on the real sector which will later have an effect on the consumers that keep them in business.”
For her, the CBN is not doing anything to curtail the excesses of the commercial banks in Nigeria, they will rather connive with them, and defraud the Nigerian consumer.
Also commenting on the development, the chairman of TPT International, one of the leading PR firms in Nigeria, Mr Modupe Adetokunbo (popularly known as Toks) disclosed that Nigerian bank customers still have causes to express dissatisfaction with the banking industry.
He said: “Although the reform saw to the end of the humiliating services received by bank customers in the 1980s and 1990s, (we all remember the era of tally numbers), other areas that require intervention bother on the CBN’s monetary policies as follow: With effect from January 1, 2016, we were told that we will no longer be able to draw from our Electronic Purse, popularly known as Automated Teller Machine (ATM) cards, for dollar-denominated transactions when we travel abroad. This development was not only a violation of the right of bank customers; it was also a major image eroder for Nigeria and Nigerians outside the shore of our country.”
Continuing, he said: “Considering the timing (December) a festive period, the policy made life difficult for card holders that were cut unawares. Some had to depend on other sources to fund their holidays while others got stranded. Up till this moment, there has not been anyjustification of this oppressive policy against the banking public.”
He said the Nigerian banks must review their strategies and adopt new business models that would reverse the ugly trends of high lending rates and massive turnover of professionals from the banking sector.
Modupe frowned upon the banks for contributing little to the Gross National Product (GNP) and encouraging high interest rates on lending, saying “this has made credits inaccessible to small and medium enterprises, farmers, and manufacturers.”
Rather than lend to the real sector and farmers, he noted that the banks have continued to show preference to financing short-term import trade, thereby contributing to the crisis in the real sector and the volatility of the foreign exchange market.
“This cannot be sustained and it is therefore necessary for us to review our business model to ensure that the banking industry takes its rightful place in financing the vital sectors of the economy,” he said.
He pointed out that with general commerce and importation of petroleum products maintaining a steady lead over the years, the banks have indirectly lend themselves to supporting the productive base and capacity of other countries to the detriment of the country.
“Since 1989 the government, through the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation, has intervened to save the banking industry. In fact, the banking industry is the most protected in Nigeria.”
