Nigerians:- Business Failures and Financial Misfortunes. Your Banks Could Be The Cause.

Financially, many businesses, many individuals and many non-profit organizations have failed and collapsed, while many more are still struggling and are even on the verge of collapse, simply because they lack the desired financial management skills, banking knowledge and the right information on how to manage their limited income, capital or donations while banking. In a simpler term, they do banking the wrong way and ignore all the obvious and important red flags.

For those who have experienced or suffered huge financial losses or deductions in the name of bank charges by simply operating/performing transactions on their bank accounts will no doubt say that banks are now the new crime stars in this electronic age, with their takings in millions. Well, a saying goes thus...do not deposit a penny into your bank account until you read this, and I strongly recommend you do.

Image source:zeebiz.com

Sadly, virtually every customer is a victim of these electronic crimes as such takings are either not noticed, sometimes noticed and most times silently endured without contest or litigation. Prospective and potential customers are also exposed to these electronic crimes.

Many Nigerians are totally unaware of the following financial dangers and the wasteful financial implications of transacting via Current Accounts which are mostly targeted by banks for their fradulent and unethical deductions.

1. It is financially wasteful to transact via a current account in the sense that charges on current account (CAMF & VAT), formerly COT & VAT, are totally avoidable. More so, your money is more protected from unethical bank deductions in a savings account.
   COT, though now phased out, is referred to as commission on turnover. A charge on debit transactions induced by customers on their current accounts to third parties and debit transfers/lodgments to the customer’s account in another bank. Note: on the 1st of May 2017 COT which was earlier scrapped in 2016, was tactically reintroduced as Negotiable Current Account Maintenance fee (CAMF) not exceeding N1 per mille, which may be charged only on customers induced debit transactions).
2. In some banks, on current accounts, failed electronic transactions attracts CAMF & VAT; thus amounting to double, triple or even more charges to the customer’s account depending on the number of failed trials before success.
   A good example goes thus;
   Mr Segun intends to transfer the sum of 1,000,000 from his current account in Bank ABC to his brother's account in Bank XYZ. The transaction was processed but due to nerwork/interconnectivity problems, the funds were not applied and returned back to his account. For that failed transaction, the bank has automatically charged him N1000 CAMF & N50 VAT. Further failed attempts will also attract the same charges. On the other hand, this scenario is not possible on a savings account.
3. Of all the current account types, conventional current account dominates and they do not attract interest payment. Thus, even if a billion naira is left in one, interest will not be applied. Note: you can negotiate with your bank for interest payment on your credit balances.
4. Due to knowledge gap, often times, when bankers are reversing wrongly posted transactions on a customer's current account, they erroneously charge COT & VAT reason been that such reversals are wrongly treated as Customer Induced instead of Bank induced.
   A typical example goes thus.
   A teller whose intention was to post a N100,000 erroneously posted a N1,000,000. In the course of reversing the transaction, the teller treats it as Customer Induced instead of Bank Induced. Thus, charging the customer COT of N1000 & N50 VAT.
5. Not to mention the high cost of borrowing, borrowing customers are now constantly being robbed and swindled in the sense that their loan deductions/repayments are subjected to CAMF & VAT charges which ought not to be. This is a fraudulent practice amongst banks and a total disregard to the Central Bank of Nigeria (CBN) directive.
6. The CBN has also mandated banks not to charge customers CAMF or any form of charge for debits or transfers between accounts in the same name, whether in the same branch or not, so long as the accounts in question are in the same bank.
   As against the CBN's directive, transfers between customers account in the same name and within the same bank are still subjected to CAMF & VAT charges; and in some cases over-the-counter charges.
7. There is a wrong practice in most banks, where current accounts are charged CAMF and VAT on failed transactions like ATM cash withdrawals, airtime purchase, DSTV payments, transfers to other banks, etc. To avoid this, all these transactions can as well be carried out on a savings account.
8. On banks self-service platforms like Internet banking, online banking, or as they choose to be called, transactions between linked accounts (accounts in the same name belonging to one customer) are charged CAMF & VAT. Thus, even when the customer is moving funds between his current accounts, or from his current account to his personal savings account, he/she is charged CAMF & VAT.
9. On the 1st of April 2013, The Central Bank released the revised guide to bank charges; thus, mandating all banks to gradually phase out COT by Charging #3 per #1000 in 2013, #2 in 2014, #1 in 2015 and #0 by 2016 which will place Naira Banks in line with international best practice & standard. Despite this, there are Naira Banks out there that have flagrantly disregarded this directive. Thus, such banks could still be charging their customers N5 per mille.
   (Note: on the 1st of May, 2017; COT was tactically reintroduced as Negotiable Current Account Maintenance fee not exceeding N1 per mille, which may be charged only on customers induced debit transactions).
10. Most people send money / cash gifts to their loved ones current accounts without both parties knowing that withdrawals of such funds will most likely attract charges; thus depleting the gift or even defeating the essence in which the money was sent. When next you want to send your loved ones money, always ask for their savings account or advise then to open one if they don't have.

Questions?
i. How much have your banks been charging you? (Past and Present) Note: Recovery is still very possible.
ii. Have you ever checked?
iii. When was the last time you reconciled your bank statement?
iv. Have you armed yourself with Central Bank of Nigeria's Revised Guide to Bank Charges Realeased on 21st April, 2017?
v. Do you know that recovery is still possible if you complain to the Consumer Protection Department of Central Bank of Nigeria?