The role of money, when properly managed, will significantly, galvanize the critical factors of production and wealth creation in every nation; in this event, the provision of banking services, is critically necessary to appropriately, manage the flow of money, between all parties to stabilize income values and sustain growth in a modern economy.

The requirement for banking services would normally grow in tandem with the volume of transactions generated through trade and other payment obligations. In retrospect, however, prior to the advent of internet services and the Cashless Policy some years back, banking halls were often choked, like the popular Oyingbo Market, by the deluge of customer activity, and it was not unusual to spend hours to complete a single transaction, for even, very modest sums. Ultimately, in an attempt at crowd control, customers would receive ‘tally numbers’, on arrival, irrespective of the size or nature of their transactions.

The increasing volume of transactions and rapidly expanding customer base, invariably translated to about three days to clear local cheques, while out of town payments took much longer.  Furthermore, the existing Settlements system was predominantly manual and the structure involved the frequent movement of large volumes of cash, in bullion trucks which habitually bulldozed right of way, with blaring sirens through traffic, totally impervious to distress caused to other long suffering road users. Predictably, the prevailing structure and process of banking operations, also compelled an expanding Labour force with huge salary related bills, which invariably deflated the annual trading results of these banks.

Nonetheless, despite the rigours suffered by customers, from the incurable shabby services and extended settlement system, some critics may however, argue that the slow process also inadvertently favourably reduced the speed of circulation of money and therefore, helped to hold back inflation.

Nevertheless, despite poor banking services, the burden of charges on transactions remained modest and did not attract too much condemnation from customers. Notably, however, with the introduction of the Cashless Policy and internet banking services, the usual rowdy market place ambience disappeared from banking halls, and banks were able to significantly reduce their, floor-space and workforce and the related burden of bloated salaries, by adopting external Contract Staff and latest information technology which cut operational cost.

Ultimately, even after customers began to express concern on perceived excessive and arbitrary deductions/charges on their deposits, with the Cashless Policy, the Banking sector, ironically, soon became the most profitable investment in the market. The subsisting bank charges, include ATM Card maintenance charge which attracts over N50 monthly from millions of customers; furthermore, banks would summarily deduct charges such as Account Maintenance fees, which vary with the volume of transactions, while SMS notification fee of about N200/month and multiple Token maintenance fees are charged on tens of millions of customer accounts. Furthermore, in January 2016, CBN directed banks to “deduct N50 stamp duty on every deposit of N1000 and above made into current accounts in order to boost government’s revenue drive.” Similarly, over 60 Naira is also deducted, without notice, after three ATM transactions with another bank! Thus, in addition to the outrageous interest on their traditional mainstay of lending money, banks may also earn well over N600bn from the strange mix of these controversial charges annually.

Indeed, in the Nation Newspaper report of 24th October 2018, one Tawa Yakubu, a fashion designer shared her experience. She said, “there was a day someone sent me N2000. It was not even upto a minute, before my bank sent an alert that my balance is N1950. I could not cry because I actually needed the exact amount the person sent me.” Other angry customers have expressed dissatisfaction and consequently appealed to Government and CBN to repeal these oppressive charges. Incidentally, a Senate resolution in 2017 which called on “CBN to suspend the ATM Card maintenance charges” seems to have been ignored. Indeed, banks still derive substantial income from several charges levied also on loans, money transfers, foreign trade, bonds, guarantees, etc.

However, in July 2018, in deference to customer appeals, CBN directed banks to pay a ‘slap on the wrist’ punishment of 0.25 per cent interest, annually, on their ‘overcharges’ to customers, despite the reality that, the respective bank may already be charging near 20 per cent interest on its own loans to the same aggrieved customers! Consequently, more customers have insisted that it would be more equitable, if these excess charges are returned, at the offending bank’s maximum lending rate, plus at least a flat penalty rate of 1 per cent per month, so as to mitigate the loss of use of funds and also punish bank perpetrators of excess charges. 

Evidently, CBN’s Consumer Protection Department still needs to do, much more, to be seen as active and credible regulator, by more customers, so as to facilitate increasing inclusion and financial patronage of banking services. Notably, however, in July 2018, the CBN reported that the rate of financial inclusion seems to be on the decline. Nonetheless, ‘wetin concern Agbero with overload?’ The banks still remain the most profitable investment, with Zenith Bank and UBA, for example, posting profit figures of N193bn and N78.6bn respectively after tax in 2018.

Indeed, in an Editorial comment, titled “Ending Excessive Bank Charges”, published in August 2018, the Leadership Newspaper noted as follows: “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 to personally follow them through. In the majority, are small amounts ranging from say 50k for stamp duty to N4 telephone alert messages and ATM transaction-related charges that banks collect, multiples times, without justification. Banks do this because they know that no customer will leave other important things to be chasing insignificant amount of money in a bank.”

Furthermore, according to Leadership Newspapers, “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 also inadequate to cover the charges (See “Parable of the Fool and his Money”- www.betternaijanow.com). Predictably, these charges will inevitably reduce credit and exacerbate existing debit balances in customers’ current accounts.”

On a personal level, this writer recalls that a domestic bank account, which was left dormant for well over 7 years, with N10,000 balance, was ultimately brought into debit of over N20,000, by several spurious bank charges; however, this customer, steadfastly ignored the intimidation, from the bank, to clear the spiraling debit they themselves created. 

Ultimately, the bank reversed the debit and later called politely to encourage ‘their customer’ to reactivate the account. The question is, if you were me, would you listen? Conversely, the sum of 200 pounds which was also left dormant, in a UK bank account, has remained, without any deduction whatsoever, as the same £200 after 10 years! Incidentally, there is no charge whatsoever for the regular statements sent. In contrast, Nigerian banks would even charge you for printing or sending you any statement! 

Regrettably, nonetheless, banks seem to still perceive customer deposits as a burden which must be taxed, rather than the actual base on which their total lending and ultimate profitability is actually predicated. For example, with the present mandatory Cash Reserve Ratio of 22.5 per cent, a customer deposit of N1000 will create at least additional N4000 liquidity for the bank to lend out and profit from.

The irony is that the cost of adopting modern technology has steadily declined with mass applications, so it is worrying that these excess charges on deposits still subsist, despite the cost advantage, from significant reduction in cash handling and adoption of a less expensive contract Labour force, with vastly improved smart banking transactions Apps and infrastructure. Inexplicably, however, the regulator appears HELPLESS to protect bank customers.