As the economy continues to grow sluggishly, the quantum of money that used to flow into the banks has reduced as customers no longer do much business amid salary delays, forcing banks to cut charges under intense competition to retain or acquire new customers.
The Central Bank of Nigeria (CBN) on December 22, 2019, reviewed downward most charges and fees for banking services as contained in the new Guide to Charges by Banks, Other Financial, and Non-bank Financial Institutions, which took effect from January 1, 2020.
Banks Standing Deposit Facility (SDF) declined by 7.18 percent to N1.93 trillion in the fourth quarter of 2019 compared to N2.081 trillion in the third quarter of 2019.
SDF is a window at the CBN where lenders deposit their excess liquidity.
Also, currency-in-circulation (CIC) declined by 7.9 percent to N2.2 trillion in January 2020 from N2.4 trillion in December 2019, data obtained from the CBN indicated.
Deposit money banks are seen going beyond complying with CBN’s new charges to offering little or zero fees on transitions done through their various electronic channels.
Standard Chartered Bank (SCB), for instance, has removed charges on most of its transactions. Consequently, transfers from one SCB to another SCB account or from an SCB account to accounts in other banks are free of charge on all its channels.
The bank’s SMS notification alerts on all transactions are also free of charge. The Visa Debit/ATM Card is free for first issuance to its new clients, while monthly card maintenance fee is free for both Savings and Current account customers.
“You can also use your SCB Debit/Credit card to withdraw from any ATM within Nigeria at no cost and this is irrespective of the number of withdrawals. This is applicable to both SCB ATMs and other Banks’ ATMs,” the banks said in a notice to its customers.
Uju Ogubunka, president, Bank Customers Association of Nigeria (BCAN), said the banks are becoming realistic on what is happening in the economy.
He explained that the economy is not growing, people are not doing business as they used to do, salaries are not paid as at when due, and there is impairment in the financial capacity of people.
“When there is excess money, you go to the bank and deposit it. The amount of money that used to flow into the bank is no longer the same and that is a challenge to the banks,” Ogubunka said.
GTBank has also reduced its transaction charges as seen from one of its customers.
“I did a transaction of N20,000 and GTBank charged me N10. I did another transaction with another first generation bank and I was charged N25,” a bank customer who does not want to be named told BusinessDay.
Ayodele Akinwunmi, relationship manager, corporate banking, FSDH Merchant Bank Limited, said there has been reduction in the transaction charges on electronic banking channels in order to encourage cashless transactions, adding that customers would benefit from this.
Following the new CBN guidelines which took effect from January 1, 2020, customers are to pay N10 for transactions below N5,000. Transaction from N5, 001-N50,000 is to attract N25 fee and above N50,000 is pegged at N50, instead of N50-N52.50k charged on all transactions before the new guidelines.
The CBN at end of its Monetary Policy Committee (MPC) meeting last month increased the Cash Reserve Ratio (CRR) by 500 basis points to 27.5 percent in January from 22.5 percent since 2016.
Godwin Emefiele, governor of the CBN, said this would help address monetary-induced inflation whilst retaining the benefits from the Loan to Deposit Ratio (LDR) policy, which has been successful in significantly increasing credit to the private sector as well as pushing market interest rates downwards.
The CBN in October 2019 raised the LDR of banks to 65 percent after the September 30 deadline given to the banks to meet its 60 percent directive.
HOPE MOSES-ASHIKE
