By Linus Aleke, Abuja
The House of Representatives yesterday directed its yet-to-be-constituted Committee on Banking and Currency to probe the issue of arbitrary charges and illegal deductions by commercial banks in Nigeria.
The House noted that some banks and financial Institutions in Nigeria indulge in the unethical practice of fleecing their customers through excess charges and unauthorised deductions.
The Committee is to report back to the House within four weeks for further action.
The Committee on Legislative Compliance was also mandated to ensure that the implementation is complied with.
This came as the House directed the Central Bank of Nigeria (CBN) to halt its directive on the addition of social media handles as part of the Know Your Customer (KYC), requirement for bank customers.
The Parliament said it was cognizant of the fact that this directive by the CBN conflicts with the provision of Section 37 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) on the right to privacy of Citizens.
The House said it was cognizant of the fact that banks in the country already have the names, telephone numbers, passport photographs, emails, National Identification Numbers (NIN), Biometric Verification Numbers (BVN), utility bills, and other basic requirements with which to identify, know and monitor customers.
The resolution to probe the arbitrary charges and illegal deduction by commercial banks in Nigeria followed the adoption of a motion sponsored by Godwin Offiono.
The law-making body, also noted that customers of different commercial banks are groaning over excessive charges on their accounts.
The House said the financial institutions known as Deposit Money Banks (DMBs) have reportedly introduced different deductions to increase their income, a development that is uncomfortable with customers.
It said it was aware that apart from Stamp Duty, bank customers also pay Value Added Tax (VAT) charges applicable on all VAT-able transactions in their account.
The legislature added that it was aware that commercial banks are charging outrageous interest on loans, and overdraft at a rate that is higher than the agreed rate in the offer letter.
“The House is further aware of the arbitrary increase in the interest rate on loans and overdrafts and increase in the other fees without notifying and getting the customer’s consent as stipulated in the Central Bank/Chartered Institute of Bankers of Nigeria (CIBN) guideline. The House is concerned that the creation of charges not recognized in the Central Bank Guide to Bank Charges is a common practice by Commercial Banks.
“The House is also concerned about the wrong application of maintenance fees, banks overcharging maintenance fees, the inclusion of transactions exempted from maintenance charge, loan liquidation, and bank-induced transactions amongst others. The House is worried that as affected customers attempted to lodge complaints to the bank’s customer care, they are treated as beggars without result,” the motion read.
*Directs CBN to halt KYC requirement
Meanwhile, the House, further mandated its yet-to-be-constituted Committee on Banking and Currency to investigate the CBN directive on the addition of social media handles as part of the Know Your Customer (KYC) and report back within three weeks for further legislative action.
The House also mandated the Committee on Legislative Compliance to ensure implementation.
The directive followed the adoption of a motion sponsored by Kingsley Chinda, Ginger Onwusibe, Victor Ogbuzor, Laori B. Kwamati, Mark Essiet, Blessing Amadi, Kelechi Nwogu, Abdulsamad Dasuki, and Fred Agbedi, during plenary.
The motion which was presented on the floor by Nwogu noted the recent directive by the CBN to commercial banks on the addition to social media handles on “Know your customer” requirements, thus making it mandatory for commercial banks to comply.
The House said it was aware that recently the Central Bank of Nigeria released its Customer Due Diligence Regulations, 2023, noting the importance of social media handles on “Know Your Customer” would galvanize compliance with anti-money laundering and counter-terrorism financing provisions.
It also noted that obtaining the additional information would be useful to financial institutions in accessing customers’ online presence and activities, thus enabling better assessment of potential risks associated with money laundering, terrorism financing, and proliferation financing.
But the House observed that laudable as this directive may appear, it may be unnecessary as it is likely to impose pressure on teeming Nigerian masses during a trying period.
The Parliament said it was cognizant of the fact that this directive by the CBN conflicts with the provision of Section 37 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) on the right to privacy of Citizens.
The House said it was cognizant of the fact that banks in the country already have the names, telephone numbers, passport photographs, emails, National Identification Numbers (NIN), Biometric Verification Numbers (BVN), utility bills, and other basic requirements with which to identify, know and monitor customers.
The House said there are better means of monitoring money laundering, terrorism financing, and proliferation financing, such as the Nigeria Police Force (NPF), Nigeria Financial Intelligence Unit (NFIU), the Economic and Financial Crimes Commission (EFCC), intelligence and crime tracking agencies, amongst others.
It was worried that if the directive takes effect, Nigerians who are not on social media, with large turnovers from their businesses and trades, would be compelled to or systematically excluded from formal banking systems with its attendant negative effects and implications.
The House was also worried about the untold hardships this directive will cause millions of Nigerians, especially the illiterate, or semi-literate business owners, traders, and entrepreneurs living in the villages and rural areas who do not have social media handles.
It expressed concern that implementing the CBN’s directive at this point may be unnecessary as it is likely to impose a lot of pressure on the teeming Nigerian masses.
The House stressed the need to revisit and halt the Central Bank of Nigeria directive to reduce the hardship and pain faced by teeming Nigerians.
