The classical laissez-faire theory is not practised anywhere; even in the most liberal capitalist economies industries are still subject to regulation.
A regulator is there to oversee the activities of operators or players in the industry under its supervision, ensure the efficient supply of quality products and check the exploitation of users of the products. Unfortunately, most regulators in Nigeria do none of such. Almost in all sectors, the Nigerian consumer or customer is abandoned to the whims and caprices of rapacious operators. More worrisome is that this issue hardly bothers the relevant committees of our “representatives” at the National Assembly. For instance, the complaints of impoverished Nigerians over poor but exploitative mobile telephone services in the country remain unaddressed by the appropriate authorities.
As an undergraduate at the University of Nigeria Nsukka, I offered courses on Law of Banking, Banking Methods & Process and even wrote my LL.B Project on “Bank Failure in Nigeria: The Legal Perspectives”, yet I make no pretensions to expertise in banking and finance. Thus, any misconception here should be excused. This, nonetheless, is without prejudice to the fact that this essay is based on personal experiences and reliable information. I now face the thrust of my write-up.
There are daily reports of how Nigerian banks rip off their customers through various charges and practices. And, repeatedly, these customers complain and cry out for appropriate regulatory intervention. Unfortunately, their complaints seem to fall on deaf ears, for I am unaware of any positive regulatory action in response thereto. Emboldened by regulatory inaction and indifference (which suggest tacit approval), many Nigerian banks now engage in more exploitative practices. The categories of such predatory bank practices are unfolded daily.
Normally, when a customer secures loan from a bank, the latter fixes a negotiated lending rate based on the prevailing interest rate approved by the apex bank. Any change in the interest rate should be brought to the notice of the borrower except otherwise agreed. In Nigeria, however, the lending rate is rarely negotiated and, when it is reviewed upwards by the Central Bank of Nigeria (CBN), the average bank automatically applies the new rate to the outstanding loan without notifying the borrower. Ironically, the same bank hides the fact of any downward review of the lending rate from its mostly uninformed customer, thereby illegally subjecting him to a higher interest regime.
Often, what bank staff present to a prospective borrower during loan negotiations as the total charges become hydra-headed once he swallows the bait. While processing loans, Nigerian banks impose on borrowers both “processing” and “administrative” fees which are duplicates. Again, they charge borrowers and corporate customers higher than what they pay lawyers to conduct searches at land and company registries. I believe that the interest rates Nigerian banks perfunctorily display at their offices and report to CBN per section 23 of the Banks and Other Financial Institutions Act (BOFIA, Chapter B3, Laws of the Federation of Nigeria 2004) are different from what most of them impose on customers. To verify this, CBN may wish to randomly obtain and examine depositors/borrowers account statements from banks.
Ancillary to the above is the fact that in line with globally accepted banking rules and practices interest rates applicable to deposits are negotiable, and banks should inform depositors of their right to negotiate same and allow them do so. But contrary to this, Nigerian banks arbitrarily fix such interest rates and impose same on depositors. Again, most Nigerians banks now surreptitiously extend to savings accounts charges that are traditionally meant for current accounts. Comparatively, the new generation banks are notorious for imposing these very unjust and variegated charges on customers.
When one withdraws a million naira or more, Nigerian banks impose what they call “cash handling charges” of about N5 for every N1000 for counting the money! This is in addition to the usual commission on transaction (COT). Is it not a time-honoured banking practice for a cashier to ensure through a count that the amount written on a cheque, withdrawal or deposit slip matches what he dispenses or receives? Moreover, do banks not handle cash when people pay in cash into accounts? Perhaps, Nigerian banks may soon impose “cash handling charges” for such cash deposits.
Generally, a current account holder is entitled to receive from his bank monthly statements of account through post at the address he stated in his account opening forms free of charge. For a savings account holder, I learnt this is once every three months. Furthermore, in this era of advanced ICT – which Nigerian banks noisily lay claim to – such statements can also be easily emailed to customers at no cost to them. But what do Nigerian banks do? Some print the bank statements in fact but fail to mail them to their customers, probably to avoid postal charges. Upon inquiry, their staffers glibly claim that the statement has been posted to you and, since you have not received it, urge you to apply for a printout which costs between N250 and N500 per page! To get such a free bank statement, a customer has to visit the bank branch where his account is domiciled within the first week of a new month and demand same. This is my grouse with a branch of Zenith Bank Plc where I maintain an account.
At the extreme, some banks do not print the free monthly statements at all; rather, they browbeat their customers into applying and paying between N250 and N500 per page for them. Many Nigerian bank depositors who were kept in the dark over their accounts have narrated sad stories of what they saw when they eventually got their bank statements. Sometimes, account holders see several bank charges with confusing nomenclature in their monthly statements.
Hitherto, GT Bank Plc used to email my monthly bank statements to me but, without warning, it just stopped doing so recently. It only sends sms and email alerts when there is a transaction on my account. Recently, I read on the website www.nairaland.com that some Nigerian banks currently refuse to oblige customers with their account balances at the Customer Service Unit, and insist they check their balances through ATMs or telephone calls to designated numbers. I had dismissed this as untrue, only to confirm it about two weeks ago when I visited a branch of GT Bank Plc in Abuja. Surely, this is an indirect way of coercing customers to use ATM cards. Again, any stranger can now call and know the state of a customer’s account.
When the wave of Automated Teller Machines (ATMs) hit the Nigerian banking shores, banks began to compel their customers to use ATM cards for withdrawals. Many of them introduced several gimmicks under which they imposed many unjustifiable charges on customers, such as monthly charges whether customers use the cards or not. This writer had, in a piece entitled “Are These ATM Charges Approved by the Central Bank of Nigeria?” published in 2008 by some Nigerian tabloids and websites, joined many Nigerians to condemn the ugly trend and urge CBN to address it. But recent events suggest that the CBN may have done nothing to check the ugly trend.
Ikechukwu A. Ogu, a legal practitioner, writes from Central Business District, Abuja. Email: [email protected]