As part of the outcome of review of the extant guide to bank charges, which has been in use since January 2004, the Central Bank of Nigeria (CBN) has concluded plans to peg the Cost of Transaction (COT) at N3 for every N1,000 transacted.
The apex bank, in a circular (CFP/DIR/GDL/01/018) to deposit money banks in July, stated that the review “is intended to align the tariff regime in the banking industry with present economic realities, and offer a platform for standard application of charges on different types of banking products and services.”
Part of the clause is that the new COT regime will be a flexible one that must not exceed 3 per cent.
Sources at the Central Bank said customers can negotiate COT charges between zero and 3 per cent, so that what customers will pay depends upon their negotiating power.
Before now, transaction cost was officially N5 for every N1,000 transacted.
This means that, officially, the Central Bank will effectively reduce cost by 40 per cent for banks’ customers.
But the snag before now was that banks never adhered to the formerly stipulated N5 for every N1,000 transacted.
Most of the banks contacted could only agree that they had been compliant with the N5 for every N1,000 transacted.
But most customers said they had not been aware of what had been charged them as COT.
In its monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2012/2013, the apex bank stated that it “shall continue to encourage banks to improve their deposit mobilization efforts. In line with the financial inclusion initiative, banks shall be required to demand zero balances for opening new bank accounts so as to make banking services accessible to the unbanked public. “Accordingly, banks are encouraged to develop new products that would improve access to credit. Banks are, therefore, required to simplify their account opening processes, without necessarily compromising the Know Your Customer (KYC) requirements.”
Amid fears over the willingness of banks to comply with the proposed transaction cost, analysts said it would be great relief to bank customers who had been taken to the cleaners by banks, mostly because of their ignorance.
CBN’s spokesman Ugochukwu Okorafor, said the policy will not discourage the cashless policy because of lower cost of transacting business, adding that infrastructure are being built to encourage the cashless policy.