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 week. The new charg...
https://newshelmng.blogspot.com/2017/04/the-new-bank-charges-lending-and.html
The Central Bank on Nigeria released a new set of guidelines to charges
by banks and other financial institutions last week. 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.)
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 14%
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 will 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 o.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.
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.)
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 14%
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 will 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 o.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.
