By Babajide Komolafe
But for his knowledge of the directive on Commission on Turn Over (CoT), he would have fallen for the dummy. Edij Efalom wanted to open a corporate account with one of the tier two banks for his micro fashion business. The Customer Relation Officer (CRO) of the bank informed him that the bank just introduced some new corporate accounts for small businesses. He was encouraged to chose the one wherein he would not pay CoT on transactions but would be charged N1000 per month. But his monthly turnover must not be more than N1 million per month.
What the CRO did not know was that this customer knew that CoT has been reduced to N3 per Mille for 2014, it would be further reduced to N1 per mile in 2015 and in 2016, banks would not be allowed to charge CoT again. The customer realized that CoT of N1 million monthly turnover would be N2000. He also realized that the monthly turnover of his micro business would for now still be far below N500. This means that if he chooses the account being offered, though he would not pay CoT, he would however be paying N1000 per month, which would be far above what he would pay as CoT if he chooses the normal corporate account. Realising this, Efalom chose the normal corporate account.
His experience further reinforced that need for bank customers to know what is going on in the industry, especially regulatory policies concerning bank charges and how banks are supposed to relate to customers on certain issues. Also as indicated above, the Central Bank of Nigeria (CBN) in 2013, introduced a revised version of Guide to Bank Charges. The Guide mandated a phased reduction in CoT Charges between 2013 and 2015, and complete elimination by 2016. From N5 per mile (or N1000), it was reduced to N3 in 2013 and N2 in 2014. This year, it would be reduced to N1, and zero by 2016.
The reduction however translated to huge reduction in banks’ income. For example in 2013 year, the CoT income of the top five banks declined N7.67 billion. From N84.96 billion in 2012, income from CoT for the five banks dropped to N77.29 billion. The reduction in CoT charge is however expected to rise to N25.76 billion this year.
To forestall this colossal loss of income, some of the banks are deploying all manner of strategies to either circumvent the directive of the CBN or introduce new bank accounts with disguised CoT charge.
This is reflected in a circular sent to banks by CBN earlier last year. The CBN stated, “Information available to CBN indicates that some banks are still charging CoT at the rate of N3 per mile-which was the agreed rate for 2013. “Our attention has also been drawn to the practice, by some banks, of charging fees which are alien to the Guide. For example, some banks offer accounts that are supposedly CoT-free but impose a maintenance or similar fee-a fee not covered by the Guide.”