April 8, 2019

Oppressive bank charges: Stamp duty sef dey inside

IFRS, banks


There is an increasing public concern on the forced burden of the serial rape of tens of millions of bank customers’ accounts, with a multiplicity of charges which dove-tailed the CBN’s facilitation of the Cashless Policy and the related electronic settlement of transactions.

Although E-banking may have triggered a higher velocity of cash flow, notwithstanding the inherent inflationary threat, it has also become increasingly apparent that millions of bank customers, irrespective of political, ethnic or religious loyalties, are clearly disturbed nationwide, that E-banking is turning out to be an expensive game, in which banks always win, while the seemingly helpless customers are ignored and left to rant and rave in vain, in a one-sided game, in which, they have inadvertently become trapped!

TSA and the N20trn unremitted stamp duty question

It is inexplicable, that despite considerable savings from smaller bank office floor space, and contract workforce, with a more competitive cost of mass application of information technology, the cost of operating bank accounts has unexpectedly steadily climbed, for every customer, since former CBN Governor, Lamido Sanusi fast-tracked ‘E’-banking less than a decade or so ago.

Notably, however, despite the significant revenue from very high rates of interest on the primary banking business of lending money to customers, the additional income from a padded list of bank charges alone, may still exceed N500bn annually, and still remain less than 1% of the total value of all transactions settled through the banks in the same period; instructively, as revealed by the data on E-payment channels in Nigeria’s banking sector, the Banking Sector recorded about 5.3bn volume of transactions valued at N340 Trillion in the third quarter of 2018. Arguably, therefore, a consolidation of the myriad oppressive charges, including stamp duty on all customer accounts may indeed exceed 1% of the total value of transactions, i.e. well over N12trn annually.

This obvious cash cow of prostrate bank accounts of customers has not escaped the attention of the usual motley cabal of public predators. We may never know who actually pressed the button; however, on 15th January 2016, Nigeria’s Banking Regulator-in-Chief issued a circular directing that, in order to boost Government revenue drive, every bank must begin to deduct N50 stamp duty, on all deposits made into bank accounts, with a value of N1000 and above. This, according to the Governor, was in compliance with the Stamp Duty Act of 2004. Ultimately, the obvious question is whether or not the preceding CBN Governors failed in their duty, not to have invoked the 2004 Act much earlier, in order to also help ‘boost’ Government’s revenue drive? Not surprising, nonetheless, there is nothing to suggest that any CBN Governor, past or present, actually suffered any sanction for such gross dereliction of duty to the Fatherland!

However, on April 2nd, 2018, a Punch Newspaper story titled “Stamp Duty: RMAFC gets approval to probe banks,” the paper reported that the Apex Bank had, actually anchored its directive (of January 15, 2016), on a Court ruling obtained by (one) Kasmal International Services Ltd in 2014, to the effect that “the 22 banks operating in the country should remit more than N6trn to NIPOST through the Company, as (the value of) Stamp Duty they were supposed to have collected since the Stamp Duty Act was passed into law in 2004!”

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Furthermore, according to the report, the Postmaster General of the Federation, Mr Bisi Adegbuyi had also written to the CBN Governor, on the “state of the stamp duties being collected on behalf of the Federal Government;” the Postmaster General, consequently, also, demanded access to the customer records of all banks so that a forensic audit could be conducted to determine what amount should have actually accumulated in the Stamp Duty Account, since the Court ruling obtained by Kasmal International Services Ltd in 2014.

It is notable, that the Revenue Mobilization & Fiscal Allocation Committee (RMFAC), the Accountant General, and NIPOST are reportedly now collaborating to determine what should have accrued in the Stamp Duty Account to date. Furthermore, the Punch report also suggests that between January 2016 and 31st December 2018, only “N30bn had so far been realized through the collection of electronic stamp duties, even when NIPOST and its agents have conversely projected revenue estimates of over N475bn every year,” if stamp duty was diligently and efficiently collected, as allegedly  amplified by a private study.

In their reaction, Standard Chartered Bank, who were not satisfied with the 2014 judgment, consequently, filed an Appeal against Kasmal International Services and 22 others. Instructively, Justice Ibrahim Saulawa, and four other Justices of the Court of Appeal, all held that “Stamp Duty Act 2004” did not impose a duty on Money Deposit Banks to deduct N50 on bank deposits! Thus, according to the Appeal Court, “electronic transactions were not covered by the Stamp Duty Act of 2004.”

The question of interest for all bank customers, from the above narrative, is whether it is N30bn that was collected since 2016 or over N475bn/annum as speculated by NIPOST, how will the total cash, so far collected, be disbursed? Presumably, with the Court of Appeal judgment, the cash sum should, of course, be properly returned to those from whose accounts (pockets) these funds were picked in the first place. A total and accurate refund, should not be a serious challenge with the adoption of e-technology, while the deposits should also attract cumulative annual interest charges at the current lending rate before refunds are made.

It is curious that the CBN Governor was eager to obey the earlier Court Order of 2014 in favour of Kasmal International Services Ltd, but has clearly not shown any respect to the latter judgment of the Court of Appeal, which ruled in favour of everyone who operates an account with the Money Deposit Banks, with its decision that Electronic transactions were not covered by the Stamp Duty Act of 2004!

Nonetheless, despite the ruling of the Appeal Court, it is unlikely that both the banks and the ubiquitous Public Sector Regulators and Predators will easily let go of the “Stamp Duty Cash Cow.” Alarmingly, the daylight robbery of tens of millions of bank customers still continues, often, with the rampant violation also of the statutory exemptions from Stamp Duty on “withdrawals or transfers from Savings Accounts, and on receipts of payments of Wages/Salaries, as well as on any deposit and fund transfers done by SELF into another owned account in the same bank or any other bank.”

Ultimately, it is arguably also counterproductive to decry contraction in consumer demand and output, as a result of inflation, while the odious contraption of oppressive bank charges is celebrated simultaneously as a source of income to banks and Government agencies!

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