24 August 2014

Nigeria: CBN and Re-Introduction of ATM Charges

The recent directive by the Central Bank of Nigeria (CBN) reintroducing charges on banks' customers using ATM points outside their banks effective from September 1, 2014, is yet another instance of policy inconsistencies that has become the norm in our national life. According to the CBN, the N65 charge per transaction "shall apply as from the fourth 'remote on us' withdrawal (in a month) by a card holder, thereby making the first three 'remote on us' transactions free for card holder but to be paid by the issuing bank. "All ATM cash withdrawals on the ATM of issuing banks shall be at no cost to the card holder." The apex bank said the fee was re-introduced "to cover the remuneration of switches, ATM monitoring and fit notes processing by acquiring banks."

We condemn the re-introduction of the ATM charges on customers of banks, coming barely three months into the tenure of the CBN governor who had assured while unfolding his 10-point agenda, that the apex bank under his watch would be people focused and strive towards poverty reduction. It is hard to see how the policy, despite the reasons given the CBN on behalf of the banks, would benefit the people who are already overburdened by all sorts of bank charges, in the face of deteriorating and inconsistent ATM services. When the N100 charge on the use of other banks' ATMs was removed by the CBN in December, 2012 during the tenure of the former CBN Governor Alhaji Lamido Sanusi, it was believed then that the idea was to encourage bank customers to use the ATMs and embrace the newly introduced cashless policy. At this time that the cashless policy has gone nation-wide, how will the restoration of the charges, even though reduced, encourage Nigerians to use the ATMs and whole heartedly embrace the cashless policy? Given the scenario of the anti-people ATM charges, the cashless policy would no doubt be a hard sell despite the punitive charges imposed on banks customers who opt for banking hall over the counter transactions.

Given the flurry of adverse reactions that have greeted the reinstatement of the ATM charges on the 'remote on us' withdrawals, the policy is obviously unpopular and counter productive. We call on the CBN to rescind the new ATM charges without delay in the interest of the majority of ATM users who constitute the poor masses.

The CBN and apologists of the new ATM policy have tried hard to give the impression that the banks are doing the people a favour by deploying ATM services and footing the maintenance cost for their customers, and may go broke without sharing the cost under any guise with their customers. Nothing can be farther from the truth. It is an open secret that by keying into ATM technology the banks have been able to save huge cost on paperwork and wage bills by retaining fewer staff in their operations. The suggestion that the banks revenue have dwindled due to CBN's fiscal policies, which pegged the cash, reserve ratio (CRR) for government and private deposits at 75 and 15 percent respectively does not hold water. Is the CBN compensating the banks that are smarting from being weaned from free government funds, which have been their source of easy monumental profits by allowing them to levy the ATM charge on their hapless customers? This newspaper believes it is time the Nigerian banks looked to their core banking business such as lending to the cash starved real sector at moderate interest rate to make their profits and thus add value to the economy. The CBN Governor, Godwin Emefiele, must keep faith with his 10 - point agenda and act in the best interest of Nigerians; the impression must not be given that he came on board to fulfill the selfish agenda of his constituency, the banking sector.

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