By UDEME CLEMENT

The revision of charges in the banking sector by the Central Bank of Nigeria (CBN), to many  entrepreneurs doing business in Nigeria, is a welcome development. The charges revision was  sequel to the  complaints from depositors about what they described as arbitrary  charges on banking services.

In that capacity, the apex bank has issued a draft of the Revised Guide to Bank Charges benchmarking lending rates to Monetary Policy Rate (MPR) for maximum of 8 per cent across board, which translates to 20 per cent at present. The target is to align the tariff regime with the present economic challenges in the country.

The initiative by the monetary authority  would, according to some industrialists,  pave the way for standard application of charges on different types of banking products and services to stimulate growth of the real sector of the economy. Also, the CBN has set up a consumer protection unit to enable consumers lodge complaints, stressing that banks are charged to refund customers when they over charge them for  services and products.

Beyond that, the sub-committee of the Bankers Committee on ethics is investigating issues of excessive bank charges and any commercial bank found contravening the law must be sanctioned accordingly.

The circular issued by CBN explained that the bank is currently reviewing the extant guide to bank charges that had been in use since January 2004. The circular stated, “The review is intended to align the tariff regime in the banking industry with present economic realities.  The exercise will enhance development of a minimum disclosure for banks to disclose to all customers prior to the consummation of every credit transaction.

“A glossary of terms has also been developed to provide clear definition of technical terms used in the guide to reduce misrepresentation or any form of ambiguity. The overarching goal of the review is to produce a guide that is collectively owned by all the stakeholders in the banking industry with the concomitant feature, which will accommodate the freedom of operators to charge competitive prices, while protecting consumers from arbitrary charges.”

In the same vein, Sunday Business learnt that bankers recently agreed to cut down operating expenses by 30 per cent in order to make funds accessible to borrowers at a lower cost. As such, the e-payment initiative involves a transformation of the payment system aims at allowing banks to cut cost through moving the economy to payments through electronic channels.”

The communiqué released by Monetary Policy Committee of CBN recently explained that the average maximum lending rate rose from 23.21 per cent in March to 23.31 per cent in April 2012, while the consolidated deposit rate rose from 3.79 per cent to 3.93 per cent in the same period. The spread between the average maximum lending rate and the consolidated deposit rate narrowed further from19.42 per cent in March to 19.38 per cent in April this year.

Thus, to uphold its regulatory framework, CBN is mandating all banks to pay three per cent as minimum interest rate on savings accounts per annum and 0.5 per cent as interest on current account to encourage savings by the public. The revised guide cancelled N500 charge for re-activation of accounts and reduced COT from N5 per mille to a maximum of N3 per mille, while SMS alerts are fixed at N5 per SMS. CBN warned that transactions with Automated Teller Machines (ATM) within the same bank must not attract bank charges, but N100 should be charged for ATM transaction from one bank to another.

Some of the banks monitored in Lagos included United Bank for Africa (UBA) branches at Medical road Ikeja and Ojodu Berger, First banks branches at Ogba, Ikeja and Victoria Island, Keystone bank branches at Adeola Odeku, Ajose, Awolowo road, Ogba and Omola.

Others include Diamond bank, Zenith, GTBank and Eco banks at Ojodu Berger. Some of the staff who spoke with our correspondent said they are working in line with the directives from the monetary authority to ensure transparency in the system, even as they complained of erratic power supply as the major infrastructure challenge facing the industry.

A manager with UBA, Ojodu branch said, “We encourage savings by reviewing charges associated with ATM cards to reduce the cost of transactions, especially for Verve Debit card customers. So, instead of the monthly charge of N100, which is a flat fee charged to all ATM card holders, we introduced pay-as-you-go charge system to encourage the uses of alternate channels to support the CBN’s policy on cashless economy.

This implies that in a whole month, if a customer does not withdraw cash at the ATM but uses Point of Sales (PoS) terminals and Internet to make payments, he will not be charged the N100 flat fee.

He continued, “Also, if you do not use the ATM to do cash transaction you do not have to pay. On the other hand, if you use ATM more than 10 times in a month, you will not be charged more than the monthly cap of N100. The pay-as-you-go type of charge is only applicable with the bank’s local Verve Debit card, though UBA has kept open the option of Visa and MasterCard single currency cards that still attract N100 per month fee with unlimited ATM access. Therefore, our customers are free to choose the N100 monthly or Pay-as-you-go option”

Aside from the draft guide on bank charges, the CBN disclosed that 88,622 Point of Sales Terminal (POS) had been made available for effective implementation of cashless economy in Lagos .

The Assistant Director, Banking Supervision, Mr Marcus Zakaria, said this while briefing journalists on the outcome of the Bankers Committee meeting in Abuja, explaining that 6,000 POS were made available in January. He said, “Now we have about 88,622 POS and we have registered over 151 merchants.

All mobile payment operators are now fully integrated with the Nigeria Inter-bank Settlement System (NIBSS), and 21 banks are currently registered on NIBSS Inter-bank Payment (NIP). Also, banks are collaborating to come up with alternative channel of delivery on mobile banking, Internet banking, and electronic fund transfer. By the end of the year, we would have attained at least a 150,000 POS in Lagos alone. The Cashless Policy in Lagos started in January as a pilot scheme. The bank is expected to roll out the operations nationwide in 2013.”

High lending rate is not good for Small and Medium Enterprises (SMEs): An operators of medium enterprise in Lagos, Mr. Silas Igwe:  The Commercial banks have raised lending rate thereby making credit to the real sector difficult.With the latest development in the banking sector, SME operators would not have easy access to credit facilities to run their businesses. This is because banks would give entrepreneurs very stringent conditions for granting loans. The apex bank should ensure that the new arrangement favours entrepreneurs especially in the area of start-ups.

Government should provide needed infrastructure to make the financial industry function effectively:  Mr. Joel Ekom, operator of Small and Medium Enterprise (SME) in Lagos- The reality is that banks are providing power to carry out their operations. At the end of the day, they transfer the cost to depositors.

So, government should provide infrastructure and enabling environment for banks to thrive. The banks are doing well. For instance, eight Nigerian banks made the list as 25 top African banks. These banks are Zenith, First Bank of Nigeria plc, Guaranty Trust Bank plc, Access Bank plc, United Bank for Africa plc, Fidelity Bank plc, First City Monument Bank plc, and Skye Bank plc