By Babajide Komolafe
The Central of Nigeria (CBN) has threatened to impose severe sanction on banks for non-compliance with its directive on offsite ATM.

Last year April the apex bank banned banks from deploying offsite ATMs, directing them to withdraw their offsite ATMs on or before June 30th 2009.  The deadline was first extended to August  31st 2009 and then later to  March 31st 2010, to allow time for the licensing of two more IADs.

Consequently the apex bank issued IAD license to Chamms Access and Coporati Services, bringing the number of IADs to three including ATM Consortium, which was the first to be licensed. They were licensed to exclusively deploy and manage offsite ATMs

According to the CBN directive the banks are to either withdraw their offsite ATMs or hand them over to any of the three IADs.

But one and half years after the directive and one year after it the licensing of the IADs investigations revealed that few banks have  fully complied with the directive.  As at the time of going to press UBA, Sterling Bank, Unity Bank, Access Bank, Bank PHB, Wema Bank have been confirmed by the IADs to have fully handed over  the processing of  their offsite ATMs.

The remaining banks have either not complied at all or have partially complied.

This, it was gathered, prompted the CBN to issue a letter about two weeks ago warning the banks of the consequences of not fully complying with the directive.

Investigation reveals that there are three levels to the handing over of such ATMs to an IAD. The first level is the agreement signing between the bank and the IAD, the second is the physical handing over of the offsite ATMs, which result to the bank removing its brand on the ATMs while the IAD puts its name on them.

The third level is the handing over of the processing of ATMs to the IAD, whereby the processes and operations of the ATMs are controlled from the ATM processing center of the IAD, and thereafter customers of the bank begins to pay the N100 processing fee whenever they use the offsite ATMs of their banks.

Vanguard investigation reveals that most of the banks have not completed the three level of handing over. While some of them some are yet to commence the process of handing over, others are either at the first level or the second level.

Some had only decided on the IAD to go with,  but have not signed agreement with the IAD, while some have signed agreement but have not physically  handed over their  offsite ATMs, those who have physically handed over have not transferred the processing of the ATMs to the IAD.

It would be recalled that banks were opposed to the directive of the apex bank and as a result shunned the invitation of the apex bank to form consortium to apply for IAD license, and this prompted the apex bank to place advertisement inviting application for IAD license from the public.

“The Central Bank of Nigeria has observed that there is little effort by deposit money banks to comply with the directive to establish two ATM consortia for the purpose of effective management and operations of their offsite ATMs.

Consequently, the Bank has decided to place an advertisement in some national newspapers outlining the procedure for registering and establishing ATM consortium. The deposit money banks will be notified of the outcome of this exercise in due course”, the CBN stated in a press release issued on June 26th 2009. This prompted the apex bank the first extension of the deadline for banks to comply.

Investigation further revealed that even after the apex bank licensed the IADs, the banks remained defiant and tried to scuttle the success of the IAD model for management of offsite ATM in order to compel the model ineffective and thus back pedal.

Among other things the banks resorted to:  hoarding ATM cash by  loading low quality or non-replenishment into offsite ATMs in the control of the  IADs;   Partial handover of offsite ATMs – handed over some locations and foot dragging on other locations  and Non-handover of offsite ATMs. A particular bank, the product of merger of a foreign bank and two Nigerian banks have been identified to be leading the notoriety in this instant. The bank, it was gathered
has also gone to great lengths to erroneously present the IAD model as unviable.

When it was clear that the apex bank was not going to back down on the directive a number of the banks commenced discussion with the IADs but refused to conclude/execute agreements often     presenting frivolous excuses and other delaying tactics.  Some of those who have executed handover agreements have delayed implementation of the agreement i.e. the actual handing over to the IAD

Other banks that have executed agreement with IADs are reportedly engaged in unilateral shut down of the offsite ATMs after the handover, thereby creating the impression to customers that IADs are incompetent to manage offsite ATMs whilst sabotaging the IAD’s business as revenues are unable to cover the costs and investments incurred by the IADs.

Investigations reveal that the reluctance of the banks to comply with the directive of the apex bank was due to fear of losing money. It was gathered that most of the banks with little branch spread have decided to compete with offsite ATMs and hence have committed resources to massive deployment of offsite ATMs hence considered the directive as unfair.