There is increasing public concern on the forced burden of the serial rape of tens of millions of bank customers’ accounts, with a multiplicity of charges, which dove-tailed the Central Bank of Nigeria’s facilitation of the cashless policy and related electronic settlement of transactions.
Although e-banking may have triggered a higher velocity of cash flow, not withstanding the inherent inflationary threat, it has also become increasingly apparent that millions of bank customers, irrespective of political, ethnic or religious loyalties, are clearly disturbed nationwide that e-banking is turning out to be an expensive game, in which banks always win, while the seemingly helpless customers are ignored and left to rant and rave in vain, in a one-sided game, in which, they have inadvertently become trapped.
It is inexplicable that, despite the considerable savings from smaller bank office floor space and contract workforce, with a more competitive cost of mass application of information technology, the cost of operating bank accounts has unexpectedly steadily climbed for every customer, since former Governor of the CBN, Lamido Sanusi, fast-tracked e-banking less than a decade ago.
Notably, however, despite the significant revenue from very high rates of interest on the primary banking business of lending money to customers, the additional income from a padded list of bank charges alone may still exceed N500bn annually and still remain less than 1 per cent of the total value of all transactions settled through the banks in the same period.
Instructively, as revealed by the data on e-payment channels in Nigeria’s banking sector, the banking sector recorded about 5.3bn volumes of transactions valued at N340tn in just the third quarter of 2018. Arguably, therefore, a consolidation of the myriad oppressive bank charges, including stamp duty on all customer accounts, may, indeed, exceed 1 percent of the total value of transactions, i.e. well over N12trn annually.
This obvious cash cow has not escaped the attention of the usual motley cabal of public predators. We may never know who actually pressed the button. However, on January 15, 2016, Nigeria’s banking regulator-in-chief issued a circular directing that in order to boost the Federal Government’s revenue drive, every bank must begin to deduct N50 stamp duty on all deposits made into bank accounts, with a value of N1,000 and above. This, according to the governor, was in compliance with the Stamp Duty Act of 2004.
Ultimately, the obvious question is whether or not the preceding CBN governors failed in their duty not to have invoked the provisions of the 2004 Stamp Duty Act much earlier, in order to also help ‘boost’ government’s revenue drive? Not surprising, nonetheless, there is nothing to suggest that any CBN governor, past or present, has actually suffered any sanction for such presumed gross dereliction of duty to the fatherland.
Furthermore, according to the report, the Postmaster-General of the Federation, Mr. Bisi Adegbuyi, had also written to the CBN governor on the “state of the stamp duties being collected on behalf of the Federal Government.” Adegbuyi also demanded access to the customer records of all banks so that a forensic audit could be conducted to determine what amount should have been consolidated in the Stamp Duty Account, since the court ruling obtained by Kasmal International Services Ltd in 2014.
It is notable that the Revenue Mobilisation and Fiscal Allocation Committee, the Accountant-General and NIPOST are reportedly collaborating to determine what should have accrued in the Stamp Duty Account to date. Furthermore, the Punch report, however, suggests that between January 2016 and December 2018, only “N30bn had so far been realised through the collection of electronic stamp duties, even when NIPOST and its agents had conversely projected revenue estimates of over N475bn every year,” if stamp duty was diligently and efficiently collected, as allegedly amplified by a private study of such deductions from bank customers.
Not satisfied with the 2014 judgment, the Standard Chartered Bank, filed an appeal against Kasmal International Services and 22 others. Instructively, Justice Ibrahim Saulawa and four other Justices of the Court of Appeal (Lagos Division) held that the “Stamp Duty Act of 2004” did not impose a duty on Money Deposit Banks to deduct N50 on bank deposits. Thus, according to the Appeal Court, “electronic transactions were not covered by the Stamp Duty Act of 2004.”
The question of interest for all bank customers, from the above narrative, is whether it is N30bn that was collected since 2016 or over N475bn per annum as speculated by NIPOST. How will the total cash so far collected be disbursed? Presumably with the Court of Appeal judgment, the cash total sum consolidated should, of course, be properly returned to those from whose accounts (pockets) these funds were picked in the first place. A total and accurate refund should obviously not be a serious challenge with the adoption of e-technology, while the deposits should also attract cumulative annual interest charges at the current lending rate charged by banks to customers before refunds are made.
It is rather curious that the CBN governor was eager to obey the previous court order of 2014 in favour of Kasmal International Services Ltd, but had clearly not shown any respect to the latter judgment of the Court of Appeal, which ruled in favour of everyone who operates any account with the Money Deposit Banks, with its decision that electronic transactions were not covered by the Stamp Duty Act of 2004.
Nonetheless, despite the ruling of the Appeal Court, it is unlikely that both the banks and the ubiquitous public sector regulators and predators will easily let go of the “stamp duty cash cow.” Alarmingly, the daylight robbery of tens of millions of bank customers’ deposits still continues, often with the rampant violation of statutory exemptions from stamp duty on “withdrawals or transfers from savings accounts and on receipts of payments of wages and salaries, as well as on any deposit and fund transfers done by SELF into another owned account in the same bank or any other bank.” There is possibly, no current holder of a bank account whose pocket has not been picked in one way or the other from the multiplicity of oppressive bank charges while the regulator looks the other way.
Ultimately, it is arguably also counter-productive to decry contraction in consumer demand and output, as a result of deliberately instigated inflation, while the odious contraption of huge oppressive bank charges are simultaneously celebrated as a veritable source of income to banks and government agencies.
Listing of the oppressive bank charges defined by the CBN in April 2017 is as follows: Current account maintenance fee (negotiable) but subject to a maximum of N1 per mile, 0.5 percent COT; other associated offshore transfer charges are also charged on foreign exhange transfers. Bank drafts attract N300/N500 from current/savings accounts respectively, while N100 flat fee is charged as processing fee for purchase/sale of Treasury Bills.
New hardware tokens — N3,500; e-transfers below and above N10m attracts N50 charge. RTGS transfers-N550; card maintenance fee cost $20 per annum for foreign currency debt and credit cards; naira debit and credit — N50 monthly, while issuance of debit cards attracts N1,000.
ATM withdrawals from same bank are free, while withdrawals using other banks’ ATM attract N65 after third withdrawal within a month.