Explained: Bank Charges, Fees & Interest Rates approved by the CBN

Explaining The New Bank Charges, Lending And Deposit Rates Announced By The CBN

The Central Bank on Nigeria released a new set of guidelines to charges by banks and other financial institutions last April. The new charges are effective May 1 2017.

Here are the key things you need to know about these charges. (You can download the guidelines by following the link above, and then read through with the explanations below.)

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Interest on deposits (Page 6)

• Banks are mandated to pay an interest of not less than 30% of the monetary policy rate for any cash on savings deposits.
• This translates to about 4.2% per annum considering that the MPR as at March 2017 was 16%
• The MPR is the rate at which banks borrow money from the CBN.
• For deposits held as collateral, the bank will pay a negotiable interest rate subject to a minimum of 30% of MPR.
• This means, if you take a loan from a bank and use your cash deposits as collateral, the bank will pay you a minimum of 30% of MPR , which is 4.2%.

Interest rates and lending fees (Page 7,8 &9)

• For local currency loans, the CBN says interest rates are negotiable but should reflect MPR.
• Thus, when banks want to charge you interest rate on loans it should be MPR plus XX%.
• Banks are also mandated to notify their customers 10 business days in advance whenever there is a rate change.
• For mortgage refinancing, the CBN says rates are negotiable subject to a maximum of MPR plus 5%
• This means those seeking mortgage loans can expect to pay at least 19%, based on the current MPR of 14%.
• For defaulters, the CBN places a maximum of 1% flat per month of unpaid amount in addition to charging current rate of interest on outstanding debt.
• Management fees charged on loans is limited to a maximum of 1% of the principal amount disbursed and should be a one-off charge.
• Facility Enhancement fee will attract a negotiable but subject to a maximum of 1% of the additional charge discharged. For example, if you collected a loan of N100m and decided to add an extra loan of N10m from the same bank under the same facility, the bank will only charge a maximum one-off fee of 1% of the N10 million.
• Management fee and Facility Enhancement fee cannot be charged same time.
• Management fees are only charged for all shared requests and renewal of expired facilities.
• Restructuring fee is also negotiable but subjected to a maximum of 0.5% of the outstanding amount being restructured. It is also one-off
• For example, if you have a loan that you want to restructure, either for a longer tenor or lower interest rate or increased facility amount, you will have to pay a restructured fee.
• Commitment fees are also negotiable subject to a maximum of 1% on the undisbursed amount of the facility. This is also one-off
• For example, if you obtained a facility of N100m and have been disbursed N20m from bank, based on your disbursement terms, the bank can charge you 1% for the balance N80m.

Other fees (Page 10, 12, & 17)

• Current account maintenance fee (CAMF) will be charged at a negotiable but subject to a maximum of N1 per mille when you initiate a transfer out of your account.
• For forex transfers out of your accounts using swift, you will be charged 0.5% COT plus any other associated off shore transfer charges. Thus, if you transfer $1,000 from your domiciliary accounts, they will charge you $5.
• Withdrawals on domiciliary accounts attract a charge of 0.05% of transaction value or $10 whichever is lower. This means they can’t charge you more than $10 for withdrawals.
• Bank drafts still remain the same at N300 and N500 from current and savings account respectively for account holders. It is N500 plus 0.1% of draft value for non-customers
• Banks can also charge N100 flat as processing fee for purchase and sale of treasury bills for their customers.

Electronic Banking Charges (Page 18)

• New hardware tokens will cost a maximum of N3,500
• While software tokens are free, banks will charge an SMS rate of not more than N4/SMS.
• If you lost your hardware token and want it recovered, you will be expected to pay a maximum of N3,500
• However, you bear the full cost only in the event of physical damage, loss of token or replacement after expiration
• Electronic fund transfers will now incur a charge of N50 if below N10 million. Transfers above N10 million will also cost N50 flat.
• RTGS transfers will cost N550.
• Banks are allowed to charge card maintenance fees at $20 per annum (or its equivalent) for foreign currency denominated debt/credit cards.
• Naira debit/credit cars will cost N50 monthly in card maintenance fees.
• Banks will also charge you N1,000 one-off charge for issuance of debit cards. If you lose the card and want it replaced it will also cost N1000 one-off.

ATM Withdrawals – Page 19

• On-us withdrawals refers to cash withdrawals from an ATM in any of the branches of your bank
• Not -on-us withdrawals refers to cash withdrawals using an ATM from your bank on an ATM of another bank
• On-us withdrawals are free while not-on us withdrawals incir a charge of N65 after the third withdrawal within the same month
• Banks are also allowed to continue to charge you not more than N4/SMS for transactions initiated by you. This is provided that you requested for this service.

This article originally appeared on Nairametrics on the 17th of April 2017.