Still on banks and the exploitation of customers

LAST week, yet another picture of the misery that Nigerians have been subjected to by the country’s Deposit Money Banks (DMBs) emerged with the revelation that ten of the banks made N265.96 billion  from account maintenance and electronic banking fees in 2020. This was revealed in a report that captured data from the annual reports of the said banks. The banks made N79.55 billion from account maintenance fees and N186.41 billion  from electronic banking fees. Recall that between January and June 2019, the four leading DMBs in the country reportedly generated N23.4 billion from maintenance charges on their customers’ accounts alone. According to the Central Bank of Nigeria’s (CBN) regulations, the account maintenance fee is applicable to current accounts only in respect of customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank. The bank also pegged the maximum cost of a hardware token at N2,500, adding that bills payment, including through other e-channels, should cost a maximum of N500. It gave a range of costs for electronic funds transfer.

In a country regarded by statistical organs as the poorest in the world and in a tottering economy marked by little or no manufacturing, it seems quite contradictory that commercial banks are declaring huge profits. Given that most of the Nigerian population is yet to be brought into the formal banking system, the only logical explanation for the present state of affairs is the exploitation of those using the formal banking system. It cannot be cheering news that on a daily basis, customers are subjected to a litany of charges, with their account balances depreciating steadily and inevitably, even when they choose not to withdraw money over a period of time. The charges in question include account maintenance charges, ATM replacement charges, short message service (SMS) alert charges and transfer charges, among others. In a highly unconscionable move, the banks send customers salutations on their birthdays, supposedly in a bid to foster good relations with them, but then they input the cost into the monthly SMS alert bill.

It is a fact that if you withdraw money from other banks’ ATMs, you pay charges after the third usage. Worse still, many of the banks have programmed their ATMs in such a way that customers can only withdraw N10,000 at once. The implication is that a customer intending to withdraw, say, N60,000 is charged N35  six times. Indeed, often when a customer struggling to survive gets a ‘lifeline’ of, say, N1,000 from a friend or relation, he or she cannot withdraw the money because of the charges imposed by banks, and ends up looking for another person to gift him or her a sum such as N50 in order to be able to withdraw the N1,000 at the ATM point. Worse still, the banks subject customers to agony through their consistently poor services, such that withdrawing from the ATM is often an impossible task, and customers have to resort to the now ubiquitous Point of Sales (POS) operators whose charges are higher than the DMBs’.

As we noted in previous editorials, although banks need to charge fees and make reasonable income to defray the high cost of doing business, especially in a clime like Nigeria where there is a paucity of economic infrastructure, the long list of fees and charges usually imposed on bank customers and their compulsory nature are concerning. As we noted, in climes where there is ready access to consumer credits, the terms and conditions of such credits may be surreptitiously couched in a manner that the beneficiaries end up paying  relatively huge charges,  but customers who use other basic banking services do not. But in Nigeria, despite the limited access to credit by the masses, it is possible to leave a bank balance in one’s account only to discover that it has suffered a diminution in size without conducting any transaction on such account for more than a year.

To say the least, we are unimpressed by the antics of the CBN which has, time and again, only pretended to be responsive to complaints by account holders. Even when it sanctions the banks, the customers who have been fleeced end up getting no reprieve. The bank once eliminated charges for using other banks’ ATMs, but soon restored them despite public outcry. In any case, the current administration led by President Muhammadu Buhari has made no secret of its intention to tax and fleece Nigerians at every available opportunity. Among other crimes against hard-working Nigerians, it reduced the interest rate on savings accounts, the category of accounts operated by the majority of Nigerian account holders. It also charges VAT and stamp duty and the banks duly deduct them from customers’ accounts.

A society is, we dare say, set up to solve problems. Pray, just how do you set up a society that runs on the exploration of people? It is distressing that the CBN has often behaved like a captured regulator, and that raises different issues on its own. For instance, in the United States, you don’t leave office as the head of a bank and then emerge as the head of the federal reserves. In Nigeria, such bankers are appointed to head the CBN and having been part of the system for so long, they fail to make the required changes. How do you regulate effectively in such a situation? There must be changes in the ways that banking operations and regulations are conducted in the country. The current regime of exploitation puts democracy in peril.

 

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