Banks defy collective agreement on COT

…CBN kicks

By DANLAMI BATURE

DEPOSIT Money banks are still charging the Commission On Turnover (COT) in defiance of collective agreement reached between them and the Central Bank of Nigeria, National Daily investigations have shown.

The development is causing serious hardship for customers who are groaning under the heavy burden of the charges in addition to other hidden charges being levied by the banks.
More worrisome is the fact that the banks are charging their customers arbitrarily.

It was gathered that the Senate is also ready to tackle Godwin Emefiele, CBN governor when he appears before the law makers on Tuesday to answer questions on the continued depreciation of the naira against other foreign currencies.

Some officials of the banks who spoke to National Daily said they are not towing the line because nobody is taking the lead in the industry on the effective compliance.
But the CBN is said to be insisting that since it was a collective agreement, compliance should have been automatic, while advising customers to explore all available means of complaining to the affected banks before escalating it.

“The agreement still stands and we expect the banks to comply on the agreement. Customers should first lodge their complaints with the banks, then CBN,” Ibrahim Mu’azu, CBN spokesperson said.

Abibu Akiode, a customer of one of the banks who made N40,000 withdrawal was charged N100.00k COT two days later. The same customer made another withdrawal of N120,000 and the same amount was charged as COT. When enquired from his account officer, he was told that no bank had started implementing zero COT and that such charges would continue until further notice.

National Daily findings revealed that some bank head offices were yet to communicate to their branches as to whether to continue to charge COT or not, since December 31, 2015, after which those charges ought to have been phased out.

The Apex bank the CBN in 2013 released the guidelines titled: “Guide to Bank charges” which gradually phased out COT in 2016. According to the guidelines “COT was reduced to N3 per N1,000 in 2013, N2 per N1,000 in 2014 and N1 per N1,000 in 2015 while it will be phased out in 2016.”

“Some banks have continued to charge above N1 per N1,000 turnover that was effective from January this year. “It was learnt that in some banks, the amount charged as COT depends on the customers relationship with the banks”, Edward Pwajok (PDP-Plateau), House of Assembly said.

The CBN said on Thursday that it has not reneged on earlier agreement with bankers’ committee to completely abolish beginning January1, 2016. It said this following recent complaints by banks customers which eventually led to observations by the House of Representatives that banks were are still taking out CoT, obviously in violation of earlier agreements and directives by the regulator.

But some other analysts spoken to said it was still early for customers to ascertain whether or not they have been charged COT until the end of the month when details of charges for the month are compiled in their banks statements.

The CBN had in a circular in June 2014 titled: ‘Implementation of the revised guideline to bank charges- Commissions on Turnover’, referenced FPR/DIR/GEN/CIR/01/008, decried situations where some banks continued to charge COT at the rate of N3.00 per mile, which was supposed to have come down to N2.00 agreed rate for the year.

However, the House of Representatives last week Tuesday mandated the apex bank to ensure that all the Deposit Money Banks operating in the country to immediately refund all COT charges this year or face severe penalties.

The House of Representatives already worried by the disregard on the policy, last Tuesday mandated the apex bank to ensure that all the Deposit Money Banks operating in the country to immediately refund all COT charges this year or face severe penalties.

To this end, the House issued a 30-day ultimatum to the apex bank to ensure compliance of the refund and full implementation of the zero COT by commercial banks.

The House, after the adoption of the motion sponsored by Edward Pwajok (PDP-Plateau), mandated its committee on Banking and Currency to ensure compliance with the directive and report back to the chamber within four weeks.

The lawmaker told the House that the zero COT policy which is meant to alleviate the suffering of citizens, boost the economy by encouraging transactions through the banks is not being implemented to the detriment of the economy.

He further told the members that the CBN zero COT policy which according to him, is in tandem with international best practices, is not being implemented by commercial banks allegedly because the apex bank has not issued any formal circular directing implementation of the zero COT.

According to Pwajok, “some banks have continued to charge above N1 per N1,000 turnover that was effective from January this year. “It was learnt that in some banks, the amount charged as COT depends on the customers relationship with the banks,” he said.

He further lamented that the monetary policy which was applauded by the general public, is being flagrantly ignored and undermined by commercial banks with attendant costs on ordinary citizens who are bank customers.