CBN begins review of banks’ charges and fees

The Central Bank of Nigerian, CBN, said it is reviewing and updating its guidelines on bank charges and fees, as parts of efforts to bring down the cost of banking and financial services on customers.

Mr. Kingsley Moghalu, Deputy Governor, Financial System Stability, CBN, in his paper titled: ‘Towards a more inclusive financial future: The Nigerian perspective,’ presented at the 2011 Global Policy Forum of the Alliance for Financial Inclusion, AFI, in Mexico, said the review of the charges and fees is designed to promote access to financial services by a large majority of the populace.

According to Moghalu, in reviewing and updating the document of the charges, the CBN will be guided by, among other factors, those including considerations of financial inclusion, with particular emphasis on consumer protection, unit cost of banks, and contemporary developments inNigeria’s banking industry.

He lamented the current practices in a number of banks, where products and services are deployed at exorbitant costs to the customers, saying that the high costs have helped in no small measure in discouraging a large number of the population from assessing financial services.

He said, “Commercial and other banks need to be key partners to central banks and stakeholders in financial inclusion, even if for reasons of enlightened self-interest.  In this context, there is a need to take a different approach to bank charges and fees to customers.

“Banks should bear financial inclusion considerations in mind in developing business models and products. While it is recognised that their unit costs are high, banks should avoid charges that can be perceived as predatory or extortionist and have the effect of excluding low-income customers or eroding the savings of depositors.”

To this end, Moghalu said the CBN is working with stakeholders in the Nigerian financial sector, a foreign and a local consultant to prepare a strategy on ways to drive financial inclusion in the country.

according to him, financial inclusion, alternatively characterised as ‘access to finance’ has been defined as ‘universal access at reasonable cost, to a wide range of financial services to every one needing them, provided by a diversity of sound and sustainable institutions.’

Going forward, he said, “The CBN will synthesize the schemes and programmes of stakeholders in the area of financial inclusion; establish weaknesses and causes of failure of these programmes and how to address them; define work and action plans of stakeholders to address financial inclusion inNigeria.

“The CBN will also promote workable models for fostering financial inclusion inNigeriaand who will own and drive them and set up special funds for promoting and developing a financial inclusion agenda forNigeria.”

Moghalu further noted that the CBN in addition to some of its reforms, has adopted some specific models to help drive financial inclusion, such as agent banking, mobile banking, financial literacy and consumer protection, model Point of Sales, POS, services and specialized banking, like mortgage banking and non-Interest banking among others.

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