Henry Ojelu
Central Bank of Nigeria, CBN’s decision to reintroduce charges on the use of Automated Teller Machines by customers of deposit money banks has been generating mixed reaction among stakeholders. Henry Ojelu writes that many bank customers are averse to the policy reversal by the new CBN Governor, Godwin Emeifele.
For a man with millions of naira in his bank account, N65 deduction from that account is insignificant. It is simply a scoop from the ocean. This is however not the case for another man with just N10,000 or less in his bank account. For that man, N65 could just be his next meal ticket. That meal ticket is exactly what the Central Bank of Nigerian, CBN, is trying to take from that man through its new Automated Teller Machine, ATM, charge.
According to the new ATM policy introduced by the CBN penultimate week, all bank customers using the ATMs will now have to pay for the service. The re-introduction of the ATM charges is coming almost two years after the CBN and the Deposit Money Banks cancelled the N100 ATM charge.
The circular announcing the re introduction of the ‘Fees on Remote-on-Us ATM Withdrawal Transactions’, signed by Dipo Fatokun, CBN Director, Banking and Payment System Department, noted that instead of N100 per withdrawal, customers using other banks’ ATMs will now pay N65. Before now, this fee used to be shared among the acquirers, issuers and switches until in 2012 when the CBN in collaboration with the Bankers’ Committee transferred the payment of N100 remote-on-us ATM cash withdrawal transactions to issuing banks. By that agreement, banks (issuers) decided to waive the issuer 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.
That cost may have become a heavy burden going by the not too impressive half year financial performance results posted by most banks this year. Though debatable, some bankers believe that ATM cost burden is one of the many factors attributed to the misfortunes of some underperforming bank. The money realised from ATM charges is believed to be in the estimate of millions of naira, which could have made some significant addition to bank earnings.
Justifying the reintroduction of the N65 ATM charge, the CBN explained that it took the latest decision as a result of the unintended consequences on banks. This, it said, had resulted in substantial cost burden incurred by banks in defraying the cost for the service.
According to the CBN, the re-introduction of the fee is to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks.
“The new charge 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 holders, but to be paid for by the issuing bank.
“September 1, 2014 shall be the effective date for the implementation of the new fee,” it said. To this end, it urged banks to conduct adequate sensitisation of their customers on the policy.
While those in the banking sector would expectedly make no fuss about this development, bank customers, especially the low income earners, are angry with the new charge. Some analysts believe that the new policy is Emefiele’s subtle way of ensuring that his past constituency which played a major role in his getting the CBN top job, does not continue to suffer.
Expectedly, several stakeholders and activists have challenged the new policy, which they believe is anti-people and also defeats the efforts to encourage cashless economy in the country. A renowned labour activist, Comrade Timi Frank, has vowed to challenge the policy in the law court if it is not reversed in two weeks. In an advertorial in the August 18 edition of The Nation newspaper, Comrade Timi threatened to sue the new CBN governor if he does not rescind the new policy, which he said is meant to serve his immediate constituency, the Deposit Money banks.
“I think that Emefiele should be reminded that the ATMs in Nigeria are used mainly by the common man like students, labourers, civil servant and the low income earners and not people like himself and friends earning six-figure salaries and above. Emefiele has not been able to bring down the interest rates nor stop charges on deposits which he promised to do on resumption of office. Rather he wants to please his paymasters in the banking sector who pressed the button to get him the CBN top job,” he said.
Comrade Timi urged Nigerians to rise up against Emefiele on this score the same way they did when the former CBN governor, Sanusi Lamido Sanusi, when he sought to introduce the N5,000 note in the guise of fighting inflation.
A non-governmental organisation, the Centre for Social Justice, CSJ, has also faulted the new CBN policy. The group, through its lead Director, Barrister Eze Onyekpere, regretted the reintroduction of the charge, stating that there was no reasonable justification for this development. It said a reversal of the policy should have addressed the premises and the rationale for the removal of the charges in the first place.
It urged the CBN to consider the interest of all the parties that will be affected by this new directive and balance any conflicts by apportioning obligations on those best positioned to bear them. The group argued that since the charges were stopped in 2012, banks had been declaring huge profits, adding that there was no credible evidence that banks’ balance sheets have been unduly impaired by their bearing of the charges.
The group, therefore, described the re-introduction of the ATM charge as a retrogressive step that would unduly burden bank customers, discourage the unbanked from using the banking system and also negate the cash-lite policy. Continuing, the group said the re-introduction of the ATM charge 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.
“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.
CSJ called for the urgent reconsideration of the new policy to allow the status quo to remain vis, to remove the newly introduced ATM charge. It said 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.”
It concluded that if the CBN cannot use its policy to facilitate the improvement of living conditions, then it has no obligation to increase the burden on the people.