CBN: Savings Account Holders To Get 30% Interest Annually

By April 25, 2017 Investment News

Commercial banks operating in the country as from May 1, 2017 are to pay their customers a minimum of 30 per cent per annum on savings account deposit.

According to the Central Bank of Nigeria (CBN), the 30 percent interest rate is not applicable if a customer makes more than four withdrawals in a month.

On current account in credit balance, the CBN said interest rate on deposits was negotiable and maintained N65 not-on-us withdrawal from other bank’s ATM after the third withdrawal within the same month.

This is contained in a new guideline to all banks, other financial institutions, and mobile payments operators issued by the director, financial policy, and regulation department of the apex bank, Mr. Kevin Amugo.

Amugo said the new guideline, which will enhance transparency and reduce ambiguity in loan transactions, was expanded to incorporate the concerns of both operators and users of financial services in the country.

He added that the guide to bank charges issued in 2013 sought to reflect developments in the financial market, provide clarity on banking terms, and reduce ambiguity in loan transactions.

The director noted, however, that the need to address the absence of a tariff regime for other financial institutions in Nigeria, enhance transparency in the operations of the guide and align the provisions to current realities necessitated further reviewing of the guide as clamoured by a broad spectrum of stakeholders.

A circular signed by him to this effect states: “The review was expanded to incorporate the concerns of both operators and users of financial services in Nigeria. The reviewed guide provides for charges on various products and service that banks, other financial institution, and mobile payment operators offer to their customers

“Banks, other financial institution, and mobile payments operations are required to present any other product, service and/or charge not covered by guide to Central Bank of Nigeria for prior written approval. Guide to charge by Banks and other financial institution in Nigeria is hereby issued and take effect from May 1,2017. It replaces the guide to bank charges that came into effect on April 1, 2017.”

The new guideline stated that term deposit account as from May 1, 2017 becomes negotiable. “Interest rate on domiciliary accounts on both current and savings accounts are also negotiable respectively. Deposits held as collateral is subject to minimum of 30 percent interest rate per annum”, an extract from the new guideline reads.

On local currency loans, the guideline said it is “negotiable if the rate should anchor interest rate, reflecting the risk-based pricing model.

“Also, when the bank intends to introduce a new rate different from the agreed rate, the bank should notify the customer of the new rate at least 10 business days in advance of the application of the new rate.

“Current Account Maintenance Fee (CAMF), is applicable to current accounts only in respect of customer-induced debit transactions to third parties and debit transfers/lodgements to the customer’s account in another bank. Note that CAMF is not applicable to Savings Accounts Negotiable subject to a maximum of N1 per mille”, the new guideline signed by Amugo stated.

Meanwhile, the CBN yesterday offered the sum of $246.2 million to authorized dealers at the forex auction in the interbank wholesale window, Small and Medium Enterprises (SMEs) as well as invisibles segments.

The sum of $150 million was auctioned at the wholesale window, while SMEs and invisibles got $52 million and $44.2 million respectively.

The action is part of the move by the apex bank to narrow the wide gap between the parallel and official rate of N307/1$.

The bank’s spokesman, Isaac Okorafor, who said the forwards sales would be concluded in the days to come, however, added that the CBN will continue its weekly sale to dealers in the Bureau de Change (BDC) segment this week in order to guarantee onward sale to end users.

According to Okorafor, the bank’s continued interventions in the different segments had guaranteed availability to individuals and business concerns.

He said the Bank was satisfied with the feedback it received concerning the response of SMEs to access forex from the new CBN window.

He further noted that the CBN was particularly determined to ease the challenges hitherto encountered by small manufacturers, hence the move to provide them with easy access to forex.

“SME operators no longer have to patronise or source foreign through unofficial windows and no more pressure on either the BDCs or any other unofficial source with the opening of the special window”, he added.

The CBN last week created a Forex window for investors and exporters, which it named, ‘Investors’ & Exporters’ FX Window’.

The apex bank circular, which announced the creation of the new window, disclosed that the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

President of the BDCs, Aminu Gwadabe, reportedly said yesterday that his members have commenced consultations with some foreign investors with a focus to increase dollar inflow to the parallel segment of the forex market.

Gwadabe explained that the currency retailers have begun the process to attract more foreign capital wit

Also, customers of mortgage banks, microfinance banks, and other financial institutions have been given four months to register for the Bank Verification Numbers (BVN) and have them linked to their accounts.

The CBN in a circular issued and signed by the Director, Other Financial Institutions Supervision department, Tokunbo Martins, said all Other Financial Institutions (OFIs) are required to enroll their customers on or before July 31, 2017.

The apex bank also noted that effective from August 1, 2017, all customers without BVN linked to their account would not be allowed to make withdrawals from their accounts.

The implementation of the BVN which started in 2014 involved only commercial banks, as other financial institutions were left out of the process.

The number of BVN issued had risen to 28.747 million as at April 9, 2017 since the implementation, while the number of bank accounts that are linked to BVN in the industry currently stands at 51.722 million as at February 2017, according to latest data provided by the Nigeria Inter-Bank Settlement System (NIBSS).

CBN, in the circular, said it had become necessary to extend the BVN enrollment to the customers of other financial institutions to avoid a broken identification link in the banking system.

It also said it became necessary because some of the OFIs, particularly microfinance banks, are located in the rural areas of the country and have customers that may not have enrolled with the commercial banks.

“In view of the foregoing, all OFIs are required to enroll their customers on or before July 31, 2017, conspicuously display notices sensitizing customers on BVN in the banking hall, ensure that all new customers have BVN and forward to the directors, Other Financial Institutions Supervision department schedule of customer accounts with BVN on August 7, 2017”, the circular stated.

The BVN which is aimed at revolutionizing the payment system in the country captures bank customers’ biometrics which are electronic verification tools for online and mobile banking that offer unique customer identification, giving unchangeable identification that helps in Know Your Customer (KYC).

Source: Leadership