Microfinance banks customers to lose N8bn yearly on N50 stamp duty

The beleaguered poverty stricken customers of grassroots banks are likely to lose N8billion yearly over N50 stamp duty deductions on loan repayments, BusinessDay findings indicate.

The Federal Government, through the Central Bank of Nigeria (CBN) had last month ordered deposit money banks and other financial institutions to commence the charging of N50 per eligible transaction, in accordance with the provisions of the Stamp Duties Act and the Federal Government Financial Regulations 2009.

There were about five million customers of Microfinance Banks (MfBs) as at last year, and about 3.3 million were active borrowers who pay N1,000 weekly on loans.

Analysis reveals that these active borrowers are expected to pay about N13.2 billion weekly and N158.4 billion and N158.4 billion yearly,  as loan repayment. If the grassroots banks begin the implementation of this policy by charging borrowers alone for N50 stamp duty, they are likely to lose N668 million monthly and N8 billion yearly, interest on loan not calculated.

The development however put a question mark on the realisation of financial inclusion strategy vision 2020, which is to include 80 percent of Nigeria’s adult population in the financial services sector.

Financial Inclusion is achieved when adults have easy access to a broad range of financial products designed according to their needs and provided at affordable costs.

Meanwhile, these poor but active Nigerians have raised alarm, calling on the national association to draw the attention of the government to their sufferings.

BusinessDay gathered that Microfinance banks may likely be exempted, following the meeting of the association of grassroots banks with the Nigerian Postal Service (NIPOST) and the CBN last week.

“This is greatly anti-financial inclusion and we are crying out that the government should come to our aid in MfBs. Our members are actually crying”, Valentine Whensu, president, National Association of Microfinance Banks (NAMB) told BusinessDay in an interview.

Whensu was concerned that charging N50 stamp duty on micro savers in addition to N1/mille account maintenance fee by deposit money banks would discourage savings habit and may lead to under-pillow savings among the grassroots.

“One suffers over N1,000 transaction because customers go directly to pay N1,000 they are expected to pay every week as loan repayment and they are charged N50. It is the MFBs that are suffering it. Are you now saying we should debit the customers in our various banks?

“ If we do that, it means N1,000 repayment has turnd to N950 and they will not be willing to continue. They will then keep their money under the pillow”, Whensu said.

“ It is wrong in a country that says it wants to increase employment, improve people financially and now it says it wants to generate N2.5 billion in an economy that is very fragile”, he said further.

The CBN noted in circular to all banks and other financial institutions that the charges are payable by receiving accounts.

According to the Apex bank, each deposit money bank shall open an account designated as NIPOST stamp duties account into which all charges collected shall be paid.

The balances in such accounts shall be transferred monthly by banks to CBN NIPOST stamp duty collection account number, while other financial institutions shall remit their stamp duty collections to any deposit money bank of their choice.

The CBN enjoined banks and other financial institutions to support government’s revenue generation drive through compliance with the provisions of the Stamp Duties Act, LFN 2004 as reinforced by the court judgment in Suit No FHC/L/CS/1710/2013.

HOPE MOSES-ASHIKE