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The increasing excessive bank charges will erode confidence in the banking sector, if the anomaly is not urgently addressed by the Central Bank of Nigeria (CBN). The menace will also lead to financial exclusion of many low-income customers, small business owners from banking services. Bank operators should know that every business, including banking is based on trust. Unfortunately, that confidence is gradually eroding because of increasing complaints by depositors over excessive bank charges.
Some of the outrageous bank charges are short messages (SMS) alerts, account maintenance fees, VAT on account charges. Others include Unstructured Supplementary Service Data (USSD), in-bank statement printing, Transfer and Electronic money levies, stamp duty charges, cash withdrawal deposit, and unexplained deductions. Every nation’s economy is as strong as the efficiency of its financial services sector. The increasing bank charges may have excluded many from financial inclusion due to lack of confidence in the banking sector.
According to a recent data from the Nigeria Inter-Bank Settlement System, as of December 2024, there were 311.65 million active accounts in the Nigerian banking sector. This, in effect, means that banks in the country realise billions naira from various charges on depositors’ accounts. It also forms part of the banks’ annual profits. This has prompted recent outcry from customers who are demanding immediate regulatory action from the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) against erring banks.
Although the CBN had hitherto asked dissatisfied customers to report such infractions by commercial banks to its Consumer Protection Department, its response to numerous complaints has not been swift. Its sanction has not been deterrent enough. This can explain the frustration and helplessness of bank customers over the exploitative and crazy charges. The frustration has compelled some bank customers to patronise fintech service outlets licensed by CBN. Nevertheless, the fintech service outlets have their own excesses, including exorbitant charges on loans.
As of first quarter 2025, commercial banks in the country earned a humongous N643.9billion from various deductions on customers’ transactions categorised as ‘fees and commission’. This includes N165.3billion from e-banking related charges. The five big banks in the country were the biggest beneficiaries of this amount. Also, in 2023, a survey by Enhancing Financial Innovation and Access (EFInA), and industry-based monitoring think-tank, showed that over 38 million Nigerian adults remain unbanked due to apparent loss of confidence in the quality of banking services, especially excessive bank charges.
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In an era of increasing digital banking, the recurring cases of excessive and unexplained bank charges may affect the integrity of the banking industry. The outrageous bank charges do not augur well for the sector. We believe that transparency, accountability, and prompt response to customers’ inquiries will enhance the operations of the banks and their profitability. For instance, in the Nigerian Stock Exchange (NSE), banks’ equities constitute about 60 percent of the total stocks traded in the exchange. If the arbitrary bank charges are not stopped, the number of unbanked population will increase.
We urge the CBN to wade into the matter and strictly enforce the guidelines on relevant levies on banking transactions. The CBN had in its 2020 revised guidelines on charges provided specific provisions guiding charges on transactions. However, these guidelines appear to be observed in breach by most banks. Resolution of customers’ complaints is slow and ineffective. For instance, out of over 1,300 complaints lodged by customers with the CBN between 2022 and 2024, less than 8 per cent were resolved conclusively. Currently, there are many court cases instituted by aggrieved customers over bank charges they consider outrageous and unacceptable.
On March 1, 2016, the Consumer Advocacy Foundation of Nigeria (CAFON) organised “No Banking Day” protest across state capitals over excessive bank charges. Later, the CBN mandated commercial banks to refund their customers a total of N6.2billion excess charges on cost of transactions for 2015 financial year. The refund arose from 6,000 complaints of unauthorised charges received by the apex bank from customers. Also in 2021, CBN slammed N89.2billion fine on some banks for illegal deductions from customers’ accounts. This was sequel to 23,526 complaints received from depositors.
There is need to restore confidence in the banking system. Bank customers are willing to pay for legitimate services. The banks should not hide under such charges to exploit their customers. Bank charges should not be used by the banks to generate revenue. Therefore, we urge the banks to desist from the unwholesome practice and exploitation of customers. Let the banks abhor unethical and unwholesome practices that will erode confidence in the sector.
