WEDNESDAY COLUMN by USSIJU MEDANER
Sometimes ago I did a piece on the monumental failure of the Nigerian banking sector. What drives me to write and continue writing on the sector is the unquestioned fact that the much desired development of Nigeria is hugely connected with its functioning. Improved savings culture and access to loan facilities leads to flow of cash, attracts more investment and mass productive capacity which is a recognised index of national growth and development. It is until the Nigerian banking sector, citizens and corporate bodies relationships culminate to yield the preceding state that we will, in the real sense of growth, begin to grow economically as a nation. And this however will forever remain a function of customer trust in the banks and the latter’s desire to affirm genuine banking etiquette as it recognises the supremacy of customers and the continuous need for customer satisfaction as an anchor of services rendering policies.
I had stated earlier that the economic development of Nigeria and Nigerians would always depend on the infrastructural facilities available in the country. In the absence of key industries and mass eruption of small scale enterprises, national development will continue to elude the nation. This is where the banking institution comes in; rendering financial services and playing the crucial role of providing funds for the growth of businesses, industries and infrastructure. Globally, without adequate and necessary financing sources, businesses and the private sector will find it difficult to raise the capital needed for setting up and maintaining their ventures as well as developing infrastructure.
We would have expected the Nigeria banks to rise up to the occasion of rendering this much needed services to the nation in the light of the fact that the sector’s indices all portray the banks as being generally solvent and doing well. This much is revealing from the regular, celebratory profit declaration of all the banks without exception. The reality however is that there are two ventures that are booming and continue to enjoy consistent growth; and these are corruption and the banking industry.
Despite declaring these monumental yearly profits decade long with a doubtful sense of corporate responsibility to Nigeria and its citizens who are their customers and the reason they are in business, the failures of the sector and the constituting banks to creating flow of funds for real time investment; both small scale, short term investments and large scale, long term investments at bearable interest rates has in irony become a liability to Nigeria preventing meaningful industrialisation that is needed to drive a sustainable economy.
The correlation between corruption and the Nigeria banks is a cause for worry. Rather than functioning in its capacity to modulate liquid capital that drives a strong economy, the banks have become a conduit for corruption and accessory to financial crimes in the country and beyond. There is no way an individual would successfully move any suspicious cash around without the knowledge of a bank. Yet, cash in millions and billions are being misappropriated and moved illegally into private accounts on a daily basis without the banks raising the red light. This is a nation where there are regulations and extant laws mandating banks to report deposits in excess of a ceiling to appropriate bodies, but apparently some are exempted; otherwise, someone will not illegally move billions without interruption and stoppages. It has become so, that the banks are not only permitting the continuous perpetration of such evil against the nation, but they are actually directly involved and are profiting from the system. The alleged story of how a bank supervised the movement of the former governor Ayodele Fayose tons of billions in cash years back is still fresh in our memories. Was it reported to NFIU? Didn’t they know it was criminal? Of course they do; then the pertinent question should be what was in it for the bank and its handlers?
The NDDC saga is another, like every other, about Nigeria’s resources stolen in trillions of naira and putting the nation and the bulk of its citizens in eternal penury and poverty of both mind and resources that create crimes and vices that further jeopardise the nation’s chances of rejuvenation. Yet, these all would not be possible without the banks. I listened to the testimony of a former lawmaker a few days ago, and it was revealing what the banks contribute to the corruption regime in the country. Imagine the banks, according to the testimony, unilaterally opening accounts for political office holders including tens of millions as initial gift and unsolicited loans to the tunes of hundreds of millions; giving politicians the impression that paying back loans and amassing wealth is as easy as willing to follow their manual that obviously teaches how to steal and hide the proceeds.
How do the ‘yahoo boys’ perpetrate their trades and get millions dropped in their bank accounts without Nigeria banks reporting nor questioning the sources of the funds they manage on their behalf? Of course, that would not be possible and sustained without certain collaborations. There have been rumours that banks even go to the extent of history of certain accounts to protect the owners who are alleged fraudsters. That is an indication of how bad and down south Nigeria Banks have drifted.
It is not a strange rhetoric in Nigeria to discuss kickbacks when the discussion is about government contracts as it is rather the accepted anomaly in our system – a norm we have come to live with. But the banks demanding kickbacks before approving a loan facility which was unheard of is now happening. I recently spoke to a large-scale agro dealer dealing in rare seedlings. He needed a facility from his bank and they were just willing to speedily process his application if only he was willing to wet their palms; they directly asked for a bribe to offer a loan facility which he would bear the full liabilities of the administrative charges, repayment and interest on the loan. Such an unbelievable degradation of the institution.
That is a glimpse of how bad the banks have become and unrepentantly drowning the nation by participating fully in every corruption that hit the nation since time immemorial. But my major worry as at today is that the banks are not just satisfied with colluding with the politicians and government office holders to defraud the nation, but have gone all the way to defrauding their common customers with reckless abandons that cannot be overlooked.
We are a nation governed by laid down rules and regulations; hence, our systems and functioning units cannot be allowed to run wildly. The Central Bank of Nigeria is empowered to control and perform oversight that prevents excesses of the institution. As it regards electronic Banking system, it remains a great innovation and a welcome advancement as we move farther into the implementation of cashless policy in the country, but the need to effectively protect consumers interests against the rapacious desires of banks should not be allowed to prevail.
Section 2(d) and 47(2) of the CBN Act, 2007, while promoting and facilitating the development and effective systems for the settlement of transactions via electronic payment systems, issue a number of sacrosanct guidelines on the operations of all electronic payment channels in the country. Unfortunately, the Act was silent on certain salient issues that affect protection of bank customers including ATM (and other electronic channel) users. Such issues bothering on withdrawal ceiling per transaction at almost all ATM points and the indiscriminate multiple charges and deductions on ATM cards by the banks have become the norm.
As at today, as against the CBN 2017 published guidelines on operation of electronic payment channels in Nigeria, which categorically states that “No Automatic Teller Machine (ATM) or acquirer shall discriminate against any card scheme or issuer;” yet, virtually all Nigeria Banks force customers holding ATM cards of Banks other than theirs to maximum withdrawal of N10, 000 per transaction while charging the card N65 per each transaction. So, if a customer had to make a withdrawal of N100, 000, that would require ten transactions and a payment of N65 per transaction, culminating at N650, when the same transactions could have been done, at most, three times at N40, 000 twice and a N20, 000 withdrawal at a total charge of N185.
Sometimes back in 2017 the CBN claimed it refunded N65 billion in wrong bank charges and deductions back to customers and subsequently on May 1st, 2017 effected a guideline for charges expected to be followed by banks and other financial institutions in the country.
Again, in February 2020, the CBN spokesperson, Isaac Okoroafor said the apex Bank had discovered illegal deductions and bank charges of over $165 million from 13, 000 customers by commercial Banks in the country. Calling the deductions illegal, excessive, unapproved and arbitrary, he claimed the apex Bank had returned the amount to the affected customers – that is, the victims.
Yet the unholy practice hasn’t abated. The ATM card holders are being charged N65 per transaction and yet still charged for maintenance at the end of the month without fail. That is clearly a fraud; a case of double charges, considering the fact that the first was equally in error, the Banks go ahead to double charge their customers because the oversight system is not functioning and no one is truly checking their excesses.
The CBN is aware of this illegality. The National Assembly is equally aware. In January 2018, the National Assembly resolved to probe the regime of illegal charges and deductions from accounts of customers by the banks in the country, yet till now, the practice has only expanded in magnitude and severity. No one is really and truly proactively protecting the customers’ rights as it affects their banking relationships.
So, left without enforced control, the banks, with impunity, have evolved and entrenched the culture of excess and arbitrary charges on their customers under sundry names such as account turnover charges, stamp duties, SMS alert charge, interest on deposits, maintenance charges etc. Suffice to say, taking effect from January 2020, CBN introduced a refreshed regime of allowable charges by banks and applicable to Bank accounts, electronic transfers and ATM. It was stated that all electronic transfer below N5, 000 will attract a maximum of N10; transfer between N5001 and N50, 000 would be charged N25 and all transfers above N50, 000 would be charged N50. The new guideline peg ATM card maintenance fee for all savings accounts at N50 per quarter and not monthly as it has been and totally zero charge for all current account holders. ATM withdrawal charges are reduced to N35 after third withdrawal within the same month as against the N65 the banks were charging. SMS mandatory alert fees are to be on cost recovery from previous maximum charge of N4.
That was laudable, but unfortunately while CBN indicated that the new guidelines on accountability, responsibility and sanctions regime is to address instances of excess, unapproved and arbitrary charges and deductions by the banks, the impunity by the latter has only increased. It is easy for me to tell the story of the bank’s abuse of their customers; having repeatedly and even recently been a victim of such a calculated fraud regime.
In the last 30 days I have had a series of unpleasant experiences with Access Bank where I operated a savings account. The first abnormality I recognised began earlier in that period of time; I had tried to credit an account with N5, 000 and I had to do it twice unsuccessfully while I was debited on both attempts including charges. While that uncompleted transactions were still pending, I made another transfer of N15, 000 to another account which experienced the same fate. Two day later, the N15, 000 was reverted as my account was re-credited with N15, 000 but not the charges that were debited along with it. The Bank failed to complete the transaction it offered, yet it charged me for such non-performance over its system. Till date, I am still waiting for reversals of the double N5, 000 I transferred earlier.
Strangely, on the 31st July 2020, I got a debit alert of N9,333.12 on my Access Bank account labeled as monthly turnover charges; and I was like do I have to pay Access Bank a monthly turnover charge of N9, 333.12 on a saving deposit below N250, 000 asides the charges on each withdrawal they never fail to take? While I was contemplating how to respond to the unacceptable deduction, I received yet another debit alert on the same account; this time N699.98 for tax deduction at source. This is an account that I had received as many debit alerts as many transfer transactions I made during the months.
This is unacceptable. We cannot continue to allow the banks perpetrate this regime of absolute fraud without rising up to challenge the system. It is a fact that CBN has lost the will to effect deciding policies that would protect the integrity of customer deposits from continuous pilfering by the system created by the banks. It gets more worrisome when citizens and bank customers are not properly guided on how to channel their complaints when they feel they have received sub-standard services from their bankers. It is absurd that the only available and accessible option is to go back to the same bank to complain about acts they willingly perpetrated against the customer. What reparation could come out of that; of course none!
CBN assured bank customers they could send their complaints via firstname.lastname@example.org or file a complaint through an online form provided by the apex Bank through www.cenBank.org/Contacts/Complaints/, yet the apex Bank does not provide any timeline for dealing with the complaints which in most cases require urgent attention and responses. It does not even acknowledge receipt of complaints through its official email. This is not proactive, not acceptable, as much as it does not represent responsibility on the part of CBN. It is rather disappointing.
It is equally necessary as an alternate route to getting justice and remediation from bank excessiveness that the Federal Competition and Consumer Protection Commission be legally empowered to checkmate the banks as it regards their dealings with customer and services delivery agreements. This will accord customers choices of options for airing their grievances and getting reparations when unduly served by the banks.
The CBN owes it to all Nigerians and the bank customers in the country to make public its regulation on charges and allowable deduction on all forms of banking transactions. Every banking service consumer would be able to consult the document and know absolutely exactly what debit alert they would receive from their bankers at designated period. If we can get to this point in bank customer interaction, then it would become possible to get the banks to explain the origins of unexpected charges. Then the impunity of most of these banks making arbitrary decisions on deposit money without the consent of depositors would no longer suffice.
It is high time Nigerians and bank customers come together to form a national association of bank customers and form a pressure group that protects the interest of their members nationwide. It is absolutely necessary that representatives of the bank customers must sit on the nation’s bankers’ committee for the same purpose of speaking on behalf of bank customers.
At this point, the need to embed a forensic auditing mechanism into the banks’ operating system to access and investigate the structure of the actual charging and deduction system effectively operated by the banks in line with the national guideline and sacrosanct allowable rules on the same is highly necessary and needed. This, the customers should individually or in group demand for to expose the illegal practices by the banks and return sanity to the nation’s financial institution.
The CBN’s perpetual reluctant posture to effect its own rules and regulations as it affects the deposit money banks’ relationships with their customers that mostly is responsible for the ongoing discourses must also be reviewed and resolved. The question needs to be asked. If CBN would intentionally close its eyes to such critical malfunctioning of the commercial banking system considering the massive negative impact the below par functioning of many a bank on the nation’s economy, then something must both be wrong and fishy. I think the time to stop appointing bankers as CBN governors has finally come. This is because the loyalty of such apex Bank governor has always been more tilted towards the profit maximisation drives of the banks because in a lot of ways, they are critical shareholders of the banks on a personal level. Looking in the direction of the academia to fill the position might just create the needed neutrality that is required of the holders of that office.
The banking institution in Nigeria needs to be exposed to a thorough restructuring both in their capacity to deliver quality services that could potentially impact the nation’s economy as expected. This is a wholesale responsibility of CBN, and I expect that the apex bank would find the will to do the needful for the country; or as a last resort, that NASS would go beyond the threshold of wishful agenda to fix the rot in the sector – in the interest of the nation and the Nigeria citizens.
GOD BLESS THE FEDERAL REPUBLIC OF NIGERIA!