A Review of the Central Bank of Nigeria’s Reintroduction of Fees on Remote-On-Us ATM Withdrawal Transactions Review Undertaken by the Centre for Social Justice (CSJ) The Banking and Payment System Department of Central Bank of Nigeria (CBN) on the August 13 2014 made public passed a circular on its decision to reintroduce fees on the remote-on-us ATM withdrawal transactions. It will be recalled that in December 2012, the CBN in collaboration with the Bankers Committee reached a resolution to transfer the payment of N100 fee on remote-on-us ATM withdrawal transactions to issuing banks. This fee was previously shared between the acquirers, issuers and switches. On the commencement of the arrangement in December 2012, banks (issuers) were required to waive the issuer’s fee (N35), which should have ordinarily been an income to them. Consequently, banks only bore the cost of N65 each time their customers use another banks’ ATM. The CBN explains that as a result of the unintended consequences of the decision, which has resulted in substantial cost burden incurred by the banks in defraying the cost of the service, the payment structure is reviewed as follows: 1. The re-introduction of remote-on-us ATM cash withdrawal transaction fee, which will now be N65 per transaction, to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks. 2. The new charge shall apply as from the 4th remote-on-us withdrawal (in a month) by a card holder, thereby making the first three (3) remote on us transactions free for the card holder, but to be paid for by the issuing bank. 3. September 1, 2014 shall be the effective date for the implementation of the new fee. 4. Banks are expected to conduct adequate sensitisation of their customers, on the introduction of the new fee. 5. All ATM cash withdrawals on the ATM of issuing banks shall be on cost to the card holder. Centre for Social Justice (CSJ) notes with regret the issuance of this circular which reintroduces the charge of N65 as from the fourth remote-on-us ATM cash withdrawal transaction in a month. There is no reasonable justification for this development; a reversal of the policy should have addressed the premises and the rationale for the removal of the charges in the first place. Pray, if the removal was to support and encourage the cashless or cash-lite policy and to ensure that bank customers get value for their patronage, what has changed to warrant the removal? Is the CBN now about to reverse the cashless and cash-lite policy? The CBN Governor in unveiling his agenda a few months vowed to mainstream poverty reduction, job creation and the development agenda in monetary policy. How will this new step further the foregoing goals? Clearly, this is a retrogressive step that will unduly burden bank customers, discourage the unbanked from using the banking system and also negate the cash-lite policy. It negates Nigeria’s international and domestic economic and social rights obligations (especially as provided in Chapter 2 of the 1999 Constitution and the obligations under article 2 (1) of the Covenant on Economic, Social and Cultural Rights) to respect already guaranteed rights and not to take steps to repeal or call back existing rights. The obligation is “forward ever” for the continuous improvement of existing conditions rather than the backward steps taken by the CBN. This CBN policy questions the basis and concept of regulation in an economy. What should regulators take cognizance of in arriving at policy decisions? Should regulation simply be for the benefit of the strong, the rich and the accentuation of inequality? The regulator from our understanding should consider the interest of all the parties that will be affected by regulation and try to balance out any conflicts by apportioning obligations on those best positioned to bear them. We are living witnesses to the fantastic profits being declared by banks since 2012 and there is no credible suggestion backed by empirical evidence that banks balance sheets have been unduly impaired by their bearing the charges. This new policy is an apparent evidence of regulatory capture. Essentially, the regulator has been captured by the core institutions it is supposed to regulate. It is regrettable that the banks which collect deposits from customers with little or no interest on saving; charge double digit interest rates on lending, will come around to force the arms of CBN into ensuring extra charges from ATM withdrawals alongside the bank charges and commissions placed on customers, such as ATM issuance and maintenance fees, N50 charges on SMS alerts, emails, print of account statements, etc. It will therefore not be out of place to ask; what services do the banks specifically render to customers aside the safe keeping of customer’s cash? It appears that in this instance, the appointment of a former director of a mainstream bank is leading to a policy in favour of his former constituency and colleagues in the industry without taking cognizance of the bigger picture of the rights of the Nigerian people who are ultimately his employer. It is imperative to remind the CBN that it has a legal and moral duty to protect the banking public from the extortion of deposit money banks. If ATMs have become the personal purse of the banking public as claimed by CBN, it means that the cashless policy is working! Policies should not be reversed simply for the fact that the author of the policy has left office. Whatever that is positive from the Sanusi era should not be rubbished simply because Sanusi has left office. Take the positives and leave the negatives; the removal of the charge was surely one of the positive signals that came out of the Sanusi era and should be continued. In the light of the foregoing, CSJ calls for the urgent reconsideration of the new policy to allow the status quo to remain vis, to remove the newly introduced ATM charges. This will give a good signal to the Nigerian banking public of the sincerity of the new CBN governor to walk the talk, thereby achieving credibility through policy consistency. If the CBN cannot use its policy to facilitate the improvement of living conditions, it has no obligation to increase the burden on the people. For now, let the status quo remain. Eze Onyekpere and Ikenna Ofoegbu
Posted on: Sun, 17 Aug 2014 10:51:39 +0000
Trending Topics
Recently Viewed Topics
© 2015