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Why bank customers abandoned 4.5 million current accounts

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By Elizabeth Adegbesan

Bank customers have said that stringent procedures of commercial banks and charges have made them abandon current accounts.

According to the latest Nigerian InterBank Settlement System (NIBSS) Industry Statistics Data, the number of current accounts held by bank customers dropped by 4.5 million or 15 percent to 25.3 million in December 2019 from 29.8 million in November 2019.

Vanguard Money Digest analysis of the Central Bank of Nigeria (CBN) Guide to Bank Charges, 2017, revealed that  a bank customer operating a current account will pay  N1 (N1,000) per mille as account maintenance fee.

The guideline stated: ” Current Account Maintenance Fee (CAMF): 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 is  negotiable subject to a maximum of N1 per mille.”

However, in its Revised Guide to Bank Charges December 2019, the CBN stopped current account holders from paying account maintenance fees.

Commenting on the decline in current account, President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said, “Multiple factors may be responsible. For example, the unfavourable economic and business environments, unexpected disengagement of people from work, increasing mortality rate of adult men and women, retirement from services without another source of income and excess charges being experienced by bank customers.

“Effects include slow down on financial inclusion rate, effectiveness of monetary policies may be jeopardised and rise in informal economy with its consequences, etc.

“Will the situation change to positive in 2020? It is doubtful especially if the economic and business environments remain as in 2019. In fact, it may degenerate further.”

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A banker, who spoke on anonymity, said that there are various class of individuals who can own a current account. But the reason why individuals are abandoning their current account is due to commission on transaction (COT) and other service charges.

She said: “There are various categories of customers who can own a current account. But basically we have the individual and business (corporate or commercial) customers.

‘‘Current account helps businessmen to make a direct payment to their creditors by issuing cheques, demand-drafts or pay-orders. It also enables a bank to collect money on behalf of its customers and credits the same in their customers’ current accounts.

“The reason why bank customers are abandoning their bank accounts is due to the Commission on Turnover (CoT) and other outrageous charges on transactions they perform.

‘‘However, the CBN’s latest Guideline on Bank Charges will help mitigate such charges. Also bank’s should use various medium to educate their customers on the importance of operating a current account and how to avoid accruing charges during transactions.”

Speaking to Vanguard Money Digest, Mr Okechukwu Uzochukwu, a current account holder who had to abandon his current account narrated his experience saying: “I do operate a current account but the requirements demanded are too much especially when you have problems making transactions from the account. I had to close the account after I requested for change of home address and was asked to bring my private house electricity bill. I still have N15,000 in the account.”

On his part, Mr Shotunde Babatunde said:” People are abandoning current account because of the bank charges. For instance, if you are to withdraw money from your current account, the service fee will be higher than those of other bank accounts. Apart from that, the stringent procedures and requirements for opening a current account scare people away. Instead, they go for savings account which has lesser service fees and easy opening procedures.”

Vanguard

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