The Central Bank of Nigeria (CBN) has reintroduced bank charges on certain categories of cash deposits and withdrawals, effective April 1.  This is coming three years after the apex bank stopped the charges, following criticisms that they could erode public confidence in the nation’s payments system.

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In a circular to all commercial banks posted on its website two weeks ago, the CBN said the decision to reintroduce the charges is part of a general review of charges under the cashless policy, which was introduced in 2012, with Lagos as the pilot state, while Abuja and five other states were brought on board on October 1, 2013. The circular was signed by the Director, Banking and Payments System Department of the CBN, Mr. Dipo Fatokun. The decision was reportedly taken at a recent Bankers’ Committee meeting.
The Bankers’ Committee also resolved that the cashless policy should be extended to the remaining 30 states. Under the new arrangement, individuals will be charged between 1.5 percent and 2 percent on deposits and withdrawals of between N500,000 and N1 million. For deposits and withdrawals above N5 million, banks will charge individual or corporate account holders between 3 percent and 7.5 percent. There are also fixed charges for higher amounts. However, military establishments and government Ministries, Departments and Agencies (MDAs) are excluded from such bank charges.
The reintroduction of the bank charges is expectedly attracting an avalanche of reactions. We consider it ill-advised and ill-conceived at this time that the country should be bringing more Nigerians into the banking system. The reasons given for the decision are also not convincing. At best, it is a decision wholly taken to benefit the banks at the detriment of their estimated 40 million customers.
Any attempt to enforce these charges will impact negatively on the payments system and, indeed, the economy, as many customers may resort to keeping their money outside the banks. The consequences of such action are better imagined than experienced.
In the case of the payments system, the CBN is aware of the fact that public confidence in the nation’s monetary system and its currency depends on the safety of the banks. That safety will be threatened if customers begin to hold back their deposits. Bearing in mind that the success of any bank depends partly on customers’ confidence, banks should not exploit their customers by slamming arbitrary charges on them.
Already, bank customers are complaining bitterly about various charges that are imposed on them and willfully taken from their accounts. Some of the controversial charges include N50 Stamp Duty and account maintenance fee.  Though the Stamp Duty charge is said to be backed by the Stamp Duty Act (2004), one issue it has raised is that it amounts to double taxation, because banks are already charging customers for their transactions. Many Nigerians believe that these charges are desperate efforts to shore up the revenue of the banks. Doing that at the expense of customers is not a good way to balance the books of the banks.
We are aware that the current economic recession and the Treasury Single Account (TSA) policy may have put the banking sector on a cliffhanger of sorts. No doubt, the banks have witnessed a sharp fall in their profitability and capital bases, but, so also has the recession affected the economic fortunes of their customers.
We, therefore, urge the CBN to reconsider the reintroduction of the bank charges to avoid its disruptive consequences on the economy. It will be recalled that last year, complaints over excessive bank charges resulted in a near paralysis of banking services when a pro-consumer group, Consumer Advocacy Foundation of Nigeria (CAFON), declared a “No Banking Day” on March 1, 2016, to protest outrageous bank charges and poor customer services.
The CBN should resist the temptation to continuously approve different charges on customers’ bank accounts. It should, instead, introduce measures that can stimulate economic growth. Introduction of arbitrary bank charges tends to portray the banks as lacking in creativity. They should take their eyes off depositors’ funds as one of the means of shoring up their income, as this smacks of bare knuckle banking. It is bereft of bright ideas required in a 21st Century banking system.
Altogether, we do not see any compelling reason for the reintroduction of the bank charges that were rightly stopped three years ago. While we empathise with the banks on their low capital bases and profit margins, they should realise that many Nigerians are not better off than they were three years ago. The banks should focus on their core mandates as financial intermediaries that supply the diverse needs of borrowers and lenders in the economy. On its part, the CBN should be wary of measures that could precipitate a loss of customers’ confidence in the banking system.