There are indications that deposit money banks are not acting in accordance with the directive of the Central Bank of Nigeria (CBN) that customers be allowed to open new accounts without any cash deposit, BusinessDay investigation show.
The directive which was first issued in April 2012 under the CBN’s monetary credit, foreign trade and exchange policy guidelines, is aimed at making banking services accessible to the unbanked public.
The policy was also aimed at enhancing the financial inclusion policy of the apex bank, as well as reducing the amount of cash outside the banking system which was impacting negatively on the monetary policy measures.
Nigeria’s adult population that is financially excluded was put at 36.9 million or 39.5 percent in 2014 according a survey by Enhancing Financial Innovation and Access (EFInA).
Consequently, the CBN decided to come with a policy that would encourage a culture of saving among the banking public.
“In line with the financial inclusion initiative, banks shall be required to allow zero balances for opening new bank accounts, so as to make banking services accessible to the unbanked public”, the CBN’s directive stated.
But BusinessDay investigation shows that very few banks including GTB and Diamond bank plc are complying with the Apex bank’s rule.
“To open a savings account with us, you have to come with utility bill, two passport photographs, a valid identification card and N5, 000. If you want to open a current account, in addition to the requirements I mentioned earlier, you’ll get two referees with N10, 000,” a staff of a Tier Two bank told a customer.
A staff of a Tier One bank said, “You need two passport photographs, a valid identification card, electricity bill and N2,000 but for current account, you need two referees and N5,000”.
A staff of another Tier One bank,said “for savings account, you have to present an electricity bill, valid identification card, one passport and a minimum of N2, 000. For the current account the minimum opening amount is N3, 000”.
At yet another Tier One bank a staff said, “We require a valid identification card, a passport, current utility bill and N1,500 because we have to give you an ATM card. For current account opening, at least N5,000 is required and two referees.”
Analysts are concerned that banks disregarding the directive may defeat the Federal Government’s financial inclusion target to reduce the percentage of adult Nigerians excluded from financial services from 64.3 per cent in 2010 to 20 per cent in 2020.
Reacting to the development, Razia Khan, managing director, chief economist, Africa global research, Standard Chartered Bank, London, said it is a good way to encourage banks to start banking the unbanked, even if they have little surplus to deposit at the outset.
“What is really needed however is a cheaper way to mobilise deposits – deploying technology to lower costs. The real constraint on banking the unbanked in Nigeria is the cost of offering banking services to the wider public, using traditional models”, she said in an emailed response to BusinessDay.
However, Bolade Agboola, executive director Cashcraft Asset Management, said, the CBN directive may not be complied with in all situations because the initial deposit is the practical confirmation of the commitment of the client to enter into the banking relationship.
“Nobody of substance will go to a banking hall to open an account without showing evidence of means and capacity to operate the account .Only few clients will seek the indulgence. The CBN directive is to accommodate special category of clients such as students who banks may open accounts for without initial deposit to woo them for a relationship and cases where documentation, such as outcome of legal search at Corporate Affairs Commission is being awaited”, Agboola said in an emailed response to BusinessDay.
HOPE MOSES-ASHIKE & CHINWE AGBEZE
