All you Need to know about New Bank Charges in Nigeria Approved by CBN from year 2020

On December 22, 2019, the Central Bank of Nigeria announced a new regime of bank charges in Nigeria’s banking system, and officially transmitted to all financial institutions under its watch the new policy document titled “Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020”. The new document replaces a similarly titled document issued in 2017 for the same purpose. According to the CBN’s Director, Financial Policy and Regulation Department, Mr. Chibuzor Efeobi, the new regime was billed to take effect from January 01, 2020. It has in deed taken effect.

According to the apex bank, the goal of this new regime of charges is to “enhance flexibility, transparency and competition in the Nigerian banking industry”. Simply put, this new guide provides the basis for the application of charges on various products and services offered by financial institutions in Nigeria to their customers. This means that it is illegal for any financial institution in Nigeria to impose charges on any financial transaction outside the charges prescribed in this new policy document, and customers need to be on the lookout to ensure compliance by the banks and other financial institutions.

In order to do this, customers need to know the new charges provided under this new regime and how they apply. This is what this article is all about. Now, let’s cut to the chase.

The first things you need to take note of are that the document clearly state that:

1. Although the Guide provides for charges on various products and services of financial institutions, it is not exhaustive. Financial Institutions ARE REQUIRED to present any new product, service or charge not covered by this Guide to the Central Bank of Nigeria for prior written approval.
2. Where a charge is stipulated as “negotiable”, financial institutions are required to draw the attention of customers to their rights to negotiate and the two parties are required to mutually agree on the applicable charge via a verifiable means.
3. The Executive Compliance Officers (ECO) of your respective banks are required to monitor compliance with the requirements of the Guide and shall be held liable for any breach (with penalty of N2 million per infraction by the bank). Essentially, these are the people you should channel your complaints to within your bank first whenever you suspect a breach or you need clarification about a charge. If they fail to act, or act unsatisfactorily, you can report the issue to the CBN and they will be held accountable.
4. Transaction receipt/alert/confirmation for any charge shall contain a description of the charge. If your bank sends you a transaction alert for a charge, that alert MUST contain a description of the charge.

These four points are very critical and self-explanatory. It is your right as a customer to demand that your bank (or other financial institution) show written approval issued by the CBN BEFORE they can charge you for any new product or service that is not covered by this policy document.

If a bank wrongfully imposes a particular charge on its customers, the penalty levied on the bank for this infraction is N2 million per customer. And, failure to comply with CBN’s directive in respect of any infraction shall attract a further penalty of N2,000,000 daily until the directive is complied with.

Also, it is also your right to negotiate a charge with your bank (or other financial institution) where this policy document allows it so. In fact, your financial institution is REQUIRED to draw your attention to this where necessary.

Now, let us take a look at some of the new charges applicable to some common transactions stipulated under this new regime.

Deposits: Interest rates
1 Current account in credit balance ~ Negotiable (customer is responsible for initiating the negotiation)
2 Savings account ~ Should be at least 30% of current monetary policy rate, MPR (currently 13.5%). Hence, the minimum interest you should earn on your savings account is 4.05% per annum. Customers forfeit this interest if they make more than 4 withdrawals in a month.
3 Term deposit accounts (such as fixed deposit accounts) ~ Negotiable (at the instance of the customer)
4. Domiciliary current account ~ Negotiable (at the instance of the customer)
5. Domiciliary savings account ~ Negotiable (at the instance of the customer)

Loans: Interest rates and Lending rates
6. Interest rate on Local currency loans ~ Negotiable (at the instance of the customer. The rate should be based on MPR, and if a bank intends to introduce a new rate different from the agreed rate, the bank should first give at least 10 business days’ notice to the borrower to that effect.
7. Interest rate on Foreign currency loans ~ Negotiable (at the instance of the customer)
8. Interest rate on Mortgage financing loans ~ Negotiable (at the instance of the customer)
9. Lending fees (shall not exceed 2%): Management Fee covering processing, appraisal, ancillary and other related fees on a new loan application (one-off charge). ~ Negotiable (at the instance of the customer) subject to maximum of 1% of the principal amount disbursed (one-off charge).
10. Lending fees (shall not exceed 2%): Facility Enhancement Fee. Applies when an additional amount is granted to a customer. Where this fee applies, management fee shall not apply ~ Negotiable (at the instance of the customer) subject to maximum of 1% of the additional amount disbursed (one-off charge).
11. Lending fees (shall not exceed 2%): Restructuring Fee (restructuring at the instance of the customer) ~ Negotiable (at the instance of the customer) subject to maximum of 0.5% of the outstanding amount being restructured (one-off charge).

Current Account Maintenance Fee (CAMF)
12. CAMF is applicable to current accounts ONLY in respect of customer-induced debit transactions to third parties, and debit transfers/lodgments to the customer’s account in another bank. ~ Negotiable (at the instance of the customer) subject to a maximum of N1 per mille.

Commission on Bonds Guarantees and Indemnities, etc
13. Bid bond/Tender Security/Bid Security/Performance bond (chargeable from date of contingent liability). ~ Negotiable (at the instance of the customer) subject to a maximum of 1% of the bond value for the first year and 0.5% on subsequent years on contingent liabilities.
14. Third-party cheque indemnities ~ To be discouraged – However, negotiable (at the instance of the customer) for non-clearing financial institutions, e.g Micro-finance banks.

Foreign Exchange Commision and Charges
15. Purchases: Purchases from CBN, inter-bank purchases, traveler’s cheques ~ As may be advised by the CBN
16. Inward telegraphic/SWIFT and other transfers expressed in foreign currency ~ No charge
17. Foreign exchange purchases from customers ~ Interbank foreign exchange bid rate
18. Outward telegraphic/SWIFT and other transfers ~ Swift cost recovery, 0.5% commission on transfer plus associated offshore bank charges (where applicable)
19. Foreign currency sales to customers ~ As may be advised by the CBN
20. Commission on withdrawals from Domiciliary accounts (savings or current) ~ 0.05% of transaction value of $10, whichever is lower

Internal Transactions (within Nigeria)
21. Customer Bank Draft (current account) ~ N300
22. Customer Bank Draft (savings account) ~ N500
23. Non-customer Bank Draft ~ N500 + 0.1% of Draft value
24. Cash handling charge ~ As may be advised by the CBN
25. Direct debit charge ~ Same as the cost of platform used
26. Failed direct debit ~
Due to reasons other than the account being unfunded – No charge
Due to the account being unfunded – 1% of amount or N5,000 whichever is higher (to be borne by drawer only)
27. Stopped cheques ~ N500 per order
28. Purchase or sale of Treasury Bills for Customers ~
(a) Processing fee – N100 flat
(b) Custodian fee – in line with extant Guidelines on Custodianship on Money Market and other fixed income instruments (applicable on Treasury bills purchase)

Electronic banking
29. Internet banking: Hardware token issuance or replacement ~ Cost recovery subject to a maximum charge of N2,500.
In the case of replacement, customer is to bear the cost only in the event of physical damage, loss of token or replacement after expiration.
30. Internet banking: Software token – One Time Password (OTP) ~ No charge
However, where the OTP is sent to the customer via SMS, charges will be on cost recovery basis.
31. Bills payment (including Bills payment through other E-channels) ~ Negotiable subject to a maximum of N500 per beneficiary payable by the sender
32. Electronic funds transfer ~
Below N5,000 – N10
N5001 - N50,000 – N25
Above N50,000 – N50
33. Card Maintenance Fee: Foreign currency denominated debit/credit card ~ $10 per annum (or its equivalent)
34. Card Maintenance Fee: Naira debit/credit card ~
Cards linked to current account – No Charge
Cards linked to savings account – Maximum of N50 per quarter (N200 per annum) maintenance fee
35. Debit Card Charges: Issuance fee ~ N1,000 (one-off charge) for either regular or premium card types
36. Remote-On-Us (i.e withdrawal) from other bank’s ATM in  Nigeria ~ Maximum of N35 after the third withdrawal within the same month
37. Replacement fee at customer’s instance for lost or damaged cards ~ N1,000 (one-off charge) for either regular or premium card types
38. Renewal fee (upon expiry of existing cards) ~ N1,000 (one-off charge) for either regular or premium card types
39. On-Us (i.e withdrawal from issuing bank’s ATM) ~ No charge
40. Not-On-Us (i.e withdrawal from other bank’s ATM) in Nigeria ~ N35 after the third withdrawal within the same month
41. Merchant service Commission: General merchant (including domestic, international travels and entertainment) ~ 0.05% of transaction value, but not more than N1,000
42. Bulk payments (e.g salaries, dividends, etc) ~ Negotiable subject to a maximum of N15 per beneficiary payable by the sender
43. SMS alert (Mandatory). However, where a customer opts not to receive SMS alert, the customer should issue an indemnity (for losses that may arise as a result) to the bank ~
Cost recovery (on customer-induced transactions)
No charge (for bank-induced transactions)
44. Email notification ~ No charge
45. Use of Unstructured Supplementary Service Data (USSD) ~ Current NIP charges apply
46. Reactivation or Closure of Accounts (savings, current or domiciliary) ~ No charge
47. Insurance premium paid on behalf of customers ~ Exact premium (customer to choose from a list of at least 3 insurance companies to be recommended by the bank
48. Over-the-counter cash withdrawals below the limit set by the CBN cash withdrawal/lodgment policy ~ No charge

The list provided above is abbreviated and applies only to commercial banks. To access the full version of the policy document as released by the CBN, and also to review the provisions regarding other Non-Bank Financial institutions such as Micro-finance banks, Primary mortgage banks, etc, please download the Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020.
Also, you can download this abbreviated guide to charges for commercial banks.