Banks have to make money
Why do businesses still crawl even after so much money is pumped into them?
Amongst other reasons, CBN says one of the major constraints for business growth in Nigeria is high-interest rates from banks.
Banks always want to make money, right?
After the Central bank slashed bank charges last December, that included charges made for withdrawals from other ATMs, banks have now devised means to make the money back from their customers, especially business owners.
What the review said
CBN made a downward review on bank charges for withdrawal from other ATMs from N65 to N35, including other e-transactions including the cost to obtain a new hardware token or renew old one, reduced from 3,500 to 2,500, charges on card maintenance were slashed to N50 quarterly instead of monthly and other payment reviews that took effect January 1, this year.
They found a way out
With interest on savings and fixed deposits as low as 1.25% and lending rate as high as 25%, also with the fall of Treasury bill yields from 12% to about 2.5% and 4.9%, banks gain a lot by offering their customer’s money to borrowers in high lending rates so they can make money from loan interest. This, in turn, poses challenges to small and medium scale businesses.
Banks have also reconfigured their dispensing machines to not dispense more than N10,000 at once so customers looking to make huge withdrawals would go countless times and get charged for it.
So far so good
Since the rise of lending rates and collateral rates, small businesses have grown cold feet in getting loans from banks even with their money in those banks, this suggests a higher focus on bigger businesses and a low support system for SMEs from these banks.
Also, with the new bank ATM configuration, it has become overly inconvenient for customers to use the automated Teller Machines, they now prefer to go through the counter, which has made banking processes longer and more hectic, where customers spend more time in making transactions.