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Banks charge customers for domiciliary account withdrawals

CBN Governor, Mr. Godwin Emefiele

Several bank customers are now incurring charges for withdrawing cash from their domiciliary accounts, it has been learnt.

This followed the Deposit Money Banks’ decision to develop new revenue sources amid looming decline in profitability occasioned by regulatory headwinds and challenging economic conditions.
Although the banks are considering several new revenue sources, findings have shown that withdrawal fee on domiciliary accounts is one of the latest options that bank executives are looking at.
Although the Central Bank of Nigeria allows the DMBs to charge a maximum of one per cent as fee on each cash withdrawal from domiciliary accounts, competition has made many of the banks not to impose the fee on their customers.

However, the harsh business environment owing largely to declining oil prices and resultant naira depreciation as well as the implementation of the Treasury Single Account policy has made some of the banks to reconsider their position as regards the withdrawal charge.
Already, Guaranty Trust Bank Plc, which does not impose withdrawal fee on domiciliary accounts, has recently introduced the fee.
Some customers of the bank have been complaining about the withdrawal fee, which was not hitherto charged by the lender.

A top official of the bank, who confirmed the imposition of the fee on cash withdrawal from domiciliary accounts, said the economic situation in the country was making companies generally to explore new revenue sources.

The official, who spoke on condition of anonymity however, said the imposition of the charges was not caused by the TSA policy or other government measures introduced in recent times.
“Like every company, we seek to explore new revenue sources. This is normal, but the charge has nothing to do with the recent government policies. We have introduced it since May,” the GTB top official said.
Further findings by our correspondent revealed that other lenders, which before now were not charging their customers for withdrawing from their domiciliary accounts, might start doing so soon.
Most of the banks were not willing to comment on the plan when contacted by our correspondent.

Banking sources said some of the lenders, which had been charging 0.2, 0.25, 0.5 per cent as withdrawal fees on domiciliary accounts, might raise it to the one per cent maximum allowed by the CBN.
The plan is to generate more revenue from fees and commissions, according to bank officials.

Industry experts and stakeholders, however, said the challenging economic environment was forcing the banks to take a second look at their tariff books with a view to reviewing some of the fees.
The Acting President, Association of Bureau De Change Operators, Mr. Aminu Gwadabe, said most of the over 2,500 members of the association body maintained domiciliary accounts with the banks.
Gwadabe, who confirmed that most of the banks were already introducing the fees, said there might be a need for the CBN to take a second look at the entire process with a view to ensuring fairness to all parties.

He said, “Most banks charge withdrawal fees, which are the equivalent of Commission on Turnover, and still charge telex fees on their customers. This is not the case in Europe and other parts of the world. You can’t charge the two.

“I think the CBN may need to look into this. Some banks, which are not charging withdrawal fees on domiciliary accounts before are now charging. Others are looking at increasing what they used to charge. The CBN must take a look at this.”

Other experts argued that the withdrawal charges were not necessary considering the fact that domiciliary accounts are non-interest yielding to the bank customers.

Others said the banks usually invested part of the forex deposits in interest yielding instruments overseas and as such, the charges were not necessary.

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