Banks, Workers’ Salaries And Hidden Charges

The activities of some commercial banks
in Nigeria, especially with regard to
charges on workers’ salaries and deductions on soft loans, have become rather unacceptable. In some cases, it has led to  illegal reduction of salaries through double taxation.

While public servants are still contesting the prevailing taxation of their salaries, the banks further deplete the miserable pay packet by deducting value added tax and a list of other charges that serve only to raise the blood pressure of the average worker.

Consequently, a greater percentage of public servants have gone back to the banks to obtain soft loans just to meet up. With loans called “Sharp-Sharp”, “No Wahala loan” among others,  are accompanied by high interest rate and another regime of deductions that give the impression that nobody monitors the banks.

While the banks apply different sharp practices in a bid to meet their usually bogus annual revenue projections, the victims (their customers) count their losses and come to the painful conclusion that banking is detrimental to their interest.

Banks, at will, deduct account management fees, Cost of Transaction (COT) and Value-Added Tax (VAT) on COT, among other charges at rates solely determined by them and sometimes do this more than once in a month.

Public servants appear to be the worst hit as they often obtain soft loans to enable them pay house rents, school fees, purchase vehicle, or meet other domestic obligations like burials only to realise that they had unwittingly cut a deal with the ‘devil’.

With the progressive drop in the salaries of government workers lately, the many phantom charges by banks have made the average worker even more desperate and disillusioned. This cannot continue to define the fate of the people even if the labour unions fail to respond to the groaning of the workers.

Also disturbing is the purported drop in the nation’s inflation rate to eight per cent and the report that the economy is improving without a corresponding impact on the living condition of the average citizen. It is sad to notice that the banks still charge more than 20 per cent interest on soft loans even as they pay less than two per cent interest on deposits.

Whereas the banks lure civil servants with the Central Bank of Nigeria (CBN’s) approved prime lending rate of 18 per cent, they have been discovered to base their monthly interest deductions on a 23.9 per cent maximum lending rate.

Again, the CBN recently directed banks to stop the N100 per transaction charge on customers for the use of Automated Teller Machines (ATMs),  some customers still allege receiving notifications on ATM charges, sometimes even when there were no such purported transactions; some banks now call it ATM maintenance fee.

Some banks now take advantage of the fact that many account holders hardly study the details of their monthly bank statements, or even bother to question the legitimacy of strange deductions. Even those who dare to ask often get frustrated after several calls or visits to the banks without convincing explanations.

The Tide believes that it is high time government took up the matter with the banks to ensure that salaries are not reduced in ways that leave the worker underpaid. In fact, the workers’ union ought to take the first interest in this matter and check the impunity of the banks.

We think that this also calls for more inclusive and robust housing/vehicle loans for public servants, especially as their living standards have been seriously altered by the unexpected deductions in their salaries.

The CBN should do more than merely encouraging short-changed bank customers to channel their complaints to its Consumer Protection Department. In fact, it should act in concert with the National Deposit Insurance Corporation (NDIC), Securities and Exchange Commission (SEC) and the National Assembly Committees on Banking and Finance to bring to an end this fraudulent banking system that discounts the interest of the customer.