The recent decision by the Central Bank of Nigeria, CBN, to reintroduce various charges on large cash transactions in deposit money banks has generated mixed reactions by Nigerians, PREMIUM TIMES investigations have revealed.
The regulator in February unveiled a new banking policy requiring Nigerians who make cash deposits or withdrawals of N500,000 and above to pay between 1.5 per cent and 7.5 per cent charges.
The Director, Banking & Payments System Department of the CBN, Dipo Fatokun, said the new charges approved by the Bankers’ Committee, would affect individual and corporate deposits and withdrawals.
Details of the charges showed that individual customers deposits and withdrawals by of amounts below N500,000 would attract no charges, while corporate customers would equally not pay any charge for deposits or withdrawals below N3 million.
Individual deposits of between N500,000 and N1 million would attract 1.5 per cent charge, against two per cent for withdrawals.
Individual deposits of between N1 million and N5 million would attract a charge of two per cent, against three per cent for the deposit of a similar amount, while depositors above N5 million would pay three per cent as against 7.5 per cent for the withdrawal of equivalent amount.
Equally, all corporate deposits between N3 million and N10 million would attract a two per cent charge, against five per cent charge for withdrawals, while deposits of amounts between N10 million and N40 million would attract three per cent surcharge and 7.5 per cent for withdrawal.
The new charges also affect deposits and withdrawals above N40 million, which would henceforth attract five per cent and 10 per cent charge respectively for corporate organizations
Since the announcement of the reintroduction of the policy, various groups and individuals have been reacting with various views and opinions on how the way they transact businesses would be affected going forward.
While some say the new policy would compel them to adjust their attitude towards cash transactions, others criticise the CBN for reintroducing the policy, after it was suspended in the wake of cashless policy, until the necessary infrastructure was put in place.
Mr. Fatokun said the CBN decided to direct all deposit money banks to review the charges on cash deposits and withdrawals under the cashless policy to minimize the use of cash in transactions by individuals and corporate businesses.
A senior official of the CBN who spoke with PREMIUM TIMES on the charges, said when the individual and corporate businesses weigh the benefits of using the various cashless payment platforms against the high costs and risks associated with cash transactions, they would be compelled to adjust their attitude.
“Think about the risk, in terms of security, a businessman faces moving huge cash from his business premises to the bank. Compare it to the convenience of transferring the same amount to his bank without any movement. Apart from saving time and cost, it saves the business security risks and ensures accountability in the business,” the official explained.
Regardless, a financial and management consultant, Uju Ogubunka, faulted the CBN for approving the new charges for deposit money banks, saying they were not set up to impose such charges on their customers.
“Some of us feel strongly that it is not right for banks to charge their customers,” Mrs. Ogubunka, who is also the President, Bank Customers Association of Nigeria, BCAN, said.
She added that it is wrong to charge bank customers on deposits or withdrawals, especially with CBN drive to achieve financial inclusion.
Mrs. Ogubunka, a former Registrar, Chartered Institute of Bankers of Nigeria, CIBN, said charging customers for deposits or withdrawals would actually encourage more customers not to embrace the banking culture.
“With multiple charges, bank customers would prefer to withdraw their money and keep at home for other activities,” he said.
The Chief Executive Officer, Global Analytics Consult Limited, Tope Fasua, said the timing of CBN decision to reintroduce the charges was wrong.
Mr. Fasua said at a time the CBN appeared to be having a handle of the foreign exchange crisis, asking banks to be charging customers for deposits or withdrawals was not right.
The Managing Director, Cowry Asset Management Limited, Johnson Chukwu, disagrees. He said charging customers for deposits or withdrawals would seriously reduce money laundering in the banking sector as well as the penchant for people to move large volumes of cash.
The President, National Association of Nigerian Traders, Ken Ukaoha, said if the CBN thought reintroducing charges on deposits and withdrawals would force people to embrace its cashless policy, the low literacy level of Nigerians may work against it.
“How many Nigerian traders would be able to use electronic banking services in view of their poor information communication technology, ICT, knowledge?” Mr. Ukaoha asked.
For Chima Kalu, an Abuja based finance analyst, the latest charges on bank customers are an over-kill, considering that they were already being forced to pay several other charges by the banks.
Apart from the N1.00 current account maintenance fees per million charged on all customer-induced debit transactions, the banks charge N50 Stamp Duty charge per transaction, to generate more non-oil revenue for the federal government.
Besides, customers are charged about N65 on every third withdrawal on other banks ATMs, apart from the N1.50 they charge for text messages for alerts on all transactions.
For Chief Executive Officer, Payworth Supermarkets, Ikeja, Lagos, Mike Amadi, charges on deposits or withdrawals are decisions every individual or business has to make.
‘We have chosen to limit dealing with cash in our transactions, because the benefits outweigh the cost of doing otherwise. That is why we use point-of-sale, POS, teller machines. It is convenient for us and customers.
“Save for problems associated with telecommunications network system of the banks, it is easier and faster for us to check and trace transactions and their payments and good for system accountability.
“The machines are issued free of charge by our bankers (First Bank), while the fee by the marketing platform servicing us is just a token. Compared to the charge on cash deposits or withdrawal, not dealing with cash is more economical,” Mr. Amadi said.
Adebayo Ladi, a manager with Kadesh Electronics, Ogba, Lagos, said the criticism against the policy is the loss customers are likely to suffer, which is avoidable.
“The charge on cash deposit and withdrawal is not affect us, because we can avoid it by using the POS, which is easier, faster and safer than carrying cash. We own and operate account with GTbank. When we needed the POS machine, we requested and it was installed for us free. Our customers pay about 0.78 per cent on every transaction,” Mr. Ladi said.
The Manager, AA Rano filling station, Kugbwa, Abuja, Sadiq Abubakar, said that following the announcement of the reintroduction of charges on deposits and withdrawals, the management of the station plans to de-emphasize cash payment by motorists.
“In fact, those wishing to pay us for any service must do so through direct transfers to our account. Anyone who wants to pay large volumes of cash would have to bear the extra cost for the bank charges,” Mr. Abubakar said.