High Bank Charges and the Gradual Shift to Traditional Methods: A need for Legislative Intervention

Abstract

The cumulative effect of the numerous bank charges as a result of the various Central Bank policies has become burdensome for many Nigerians especially low-income earners and small business owners who are struggling with various financial challenges including the high cost of living occasioned by the current economic realities in the country. The difficult reality of being “overcharged” by the banks has led to widespread dissatisfaction, with many persons resorting to the traditional methods of saving at the detriment of formal banking system. This shift has the capacity of hampering bank’s capacity to lend and sustain economic activities in the country, causing inflation as well as making it more difficult to regulate inflation and stabilise the economy. This brief therefore, examines the implications of high bank charges, the resultant shift towards informal savings, and proposes that for banking services to be available, reasonably priced, and in line with the larger objective of inclusive economic growth, the following legislative actions may be considered: i. The relevant Committees of the National Assembly (Senate Committee on Banking, Insurance and other Financial Institutions as well as House Committee on Banking Regulation), in synergy with the CBN, may wish to introduce a legislation that would standardize bank charges, ensuring they are transparent, fair and proportionate to the services rendered; ii. Consumer protection regulations should be strengthened to ensure that banks and other financial institutions clearly communicate these charges to their customers, and provide avenues to appeal unjust deductions; and iii. The National Assembly, through its oversight function, may wish to advise the CBN Governor on the need to establish national financial literacy initiatives to inform the public about banking services, fees, and issues of consumer rights.