ILLEGAL COT: CUSTOMERS LOSE N10M FOR EVERY N5BN TRANSACTION

http://www.nigerianbestforum.com/blog/?attachment_id=122533 Banks have continued to disobey Central Bank of Nigeria (CBN)'s directive to collect N3 per N1,000 as Cost of Transaction (COT).

LEADERSHIP investigation revealed that the banks still collect N5 per N1,000.

In  a bid to reduce the burden on banks' customers, the CBN last year directed banks to reduce the COT charged on customers' current accounts. The revision was sequel to the complaints from depositors about what they described as arbitrary charges on banking services.

But just as the banks were reluctant to obey the CBN directives on the cancellation of N100 charges for use of Automated Teller Machines (ATMs), the banks are finding it difficult to obey central bank's directives on COT.

With their disobedience to revert to N3/N1,000, the banks are indirectly defrauding their customers of sizeable amount of money.

For instance, if a customer transacts N5 billion business on their current account daily, and the bank charges him N5/N1000 instead of N3/1000, the bank will be defrauding its customers a total of N10 million on a daily basis.

Some bank customers noted that due to the charges, they had abandoned their current accounts for savings or reserved it for necessary transactions.

According to a customer of one of the top banks, Mr Seun Odumusi 'what I do is that I move money from my current to savings and then withdraw from the savings because it will cost me less that way instead of paying N5 on every N1000. The COT is too much and I try as much as possible to avoid it.'

Another customer who spoke with LEADERSHIP charged the CBN to slam fines against all the erring banks as they have refused to comply with the revised charges.

The CBN in its latest financial stability report noted that it had received 444 petitions amounting to N1.41 billion from bank customers relating to alleged excess bank charges in the first half of last year.

Mr. Joseph Ogume, one of the bank customers said if the banks were finding it difficult to comply with a mere reduction in COT from N5/N1,000 to N3/N1,000, how will they comply when the central bank eventually stops COT?

Mr Tunde Lemo, the Deputy Governor in charge of operations had in March 2012 announced that the CBN will stop banks from collecting COT.

'COT will disappear in the next two to three years,'' Lemo had said at the first annual Lagos Business Conference last year.

Mr Eddie Osarenkhoe, immediate past President, Finance Houses Association of Nigeria (FHAN), described the move as 'a good thought''.

According to him, the initiative would encourage more people to open current accounts.

'The policy will enhance competitiveness in the financial system since banks will device means of attracting more customers,'' he said.

Osarenkhoe said that the initiative would make people to bring money kept in their pillow to the banks, adding that the proposal was another way to achieve the objective of the cash less policy.

There are now doubts if the day will come that COT will be completely removed.