Banks dissuade people from accessing financial services

Despite the stated intentions and strategies rolled out by the Central Bank of Nigeria and the deposit money banks to deepen financial inclusion in Nigeria, the banks are actually acting to dissuade people from accessing financial services in Nigeria and have effectively become the greatest disincentives to financial inclusion in Nigeria. Since the fall in price of oil and the recession in Nigeria that has badly affected the banks, the banks have turned their attention to depositor’s money to make up for their shortfalls.

An industry source recently volunteered that about 70 percent of banks’ revenue comes from interests on loans while about 30 percent comes from fees and commission incomes. It is also common knowledge that most of the banks’ exposures are in the oil and gas sector.

With the banks badly exposed and revenues declining rapidly, they have come for depositor’s money with charges such as ATM withdrawal charges, SMS and email alert fees, account maintenance fee, fee on inter-bank transactions even on banks’ internet platforms and other such frivolous fees and charges. The CBN had earlier in the year ordered the stoppage of the Commission on Turnover (COT) charges, but underestimated the effect it will have on Nigerian banks. It was forced to do a volte face and introduced the arbitrary account maintenance fee, which is far worse and higher than the proscribed COT charge. This is besides the compulsory stamp duty charge of N50 on all bank customers for bank transactions in the country. Although the government and the CBN directed that the postal duty charge be levied only on current accounts, most banks have blatantly extended the charge to all account holders.

Consequently, many Nigerians are being discouraged from patronising the banks or using formal financial services as provided by the banks. For instance, according to a story ran by the Vanguard on the declining culture of savings in Nigeria, Mr Nkechi Obiora, a journalist, “said that she usually saved money through a thrift association in her office. According to her, it is of no use leaving money in her bank accounts since the money deducted from her account is more than the interest accrued to the money in the account.”

Femi Olatunde (note real name) is a policeman in Lagos. He says although it is compulsory for him to maintain a bank account since his salary is paid directly to his bank account, the moment he receives an alert notifying him of the payment of his salary, he quickly goes to withdraw every money in his account because, according to him, “the banks just cut my money anyhow”. True, investigation by BusinessDay shows that the rate and frequency of bank charges have increased with the economic downturn in the country. The most notorious of such charges is the account maintenance fee arbitrarily imposed and deducted from customers’ accounts monthly.

What is worse and bad news for financial inclusion is that Nigerians being targeted for inclusion are the most sensitive to the imposition of such arbitrary charges. Petty traders and those in operating in the informal economy therefore prefer to conduct other means of banking their money other than patronising the banks. Sule, a trader in Balogun market told BusinessDay he prefers to save his money through his market union’s thrift society than to go to the banks where the banks will just be feasting on his money. He said he was forced to close his bank account when he could no longer accept the arbitrary charges by his bank.