The Central Bank of Nigeria (CBN) Thursday outlined plans to gradually phase-out the Commission on Turnover (COT) charged current account by 2016. Specifically, the apex bank directed all banks to reduce COT from its current rate of N3 to N2 by 2014, N1 by 2015 and banks are not expected to charge for COT on current account transactions by 2016.
This formed part of the banking sector watchdog’s “Revised Guide to Bank Charges,” dated March 27, 2013, a copy of which was posted on its website. The 36-page document, according to the CBN, would become effective from April 1.
It explained that COT applies to customer-induced debit transactions on current account, even as it warned commercial banks not to charge COT on “returned outward clearing cheques, reversal on transactions and all bank-induced debits.” The CBN however pointed out that for loan repayment from current or savings account, COT is free.
Also, it stated that for debit transactions such as transfer to other accounts in the same name, in same branch or at another branch of the same bank, no COT would be charged.
The Guide to Bank charges, first issued in 2004, was meant to provide a standard for the application of charges in the banking industry, and to minimise conflicts between banks and their customers.
Over time, it was observed that the various charges in the Guide had become out of tune with current realities in the market, and some provisions/terms in it allowed room for ambiguity and conflict.
“In order to reflect current developments in the market and provide clarity, on banking terms, the CBN recently conducted a review of the “Guide” in consultation with all the banks and discount houses, Bankers’ Committee, financial experts/consultants and also considered inputs received from other stakeholders to produce the Revised Guide to Bank Charges.
“To reduce the ambiguity in loan transactions, minimum disclosure requirements for loan contracts have been stipulated. Banks and discount houses are enjoined to ensure compliance with provisions of the Guide,” the apex bank added. The document also stated that for savings deposit accounts, a minimum charge of 30 per cent of Monetary Policy Rate (MPR) would be charged, while for term deposit, the charge is negotiable.