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Just In: CBN Reduces Electronic Transfer, ATM Withdrawal Charges

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The Central Bank of Nigeria (CBN) has reviewed downward electronic transfer and ATM fees as well as card maintenance fees.

The new charges were contained in the latest Guide to Charges by Banks and Other Financial Institutions just released by the CBN

According to the CBN, bank customers will now pay N10 for electronic transfers below N5,000, and N25 for electronic transfer between N5,000 and N50,000. Only electronic transfer above N50,000 will attract N50 charge.

This Guide, which replaces the Guide to Charges by Banks and Other Financial Institutions issued in 2017, takes effect from January 1, 2020, and maybe reviewed from time to time to reflect changes in the business environment.

The CBN, therefore, urged financial services providers and their customers alike to acquaint themselves with the provisions of the Guide and be properly guided accordingly.

Previously, bank customers pay N50 charge for electronic transfers below N500,000.

Further, the CBN in the new Guide to Bank Charges slashed charges for cash withdrawal via Other bank’s ATM to “maximum of N35 after the third withdrawal within the same month” from “N65 after the third withdrawal within the same month”.

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The CBN also removed Card Maintenance Fee (CAMF) on all cards linked to current accounts, a maximum of one Naira per mille for customer induced debit transactions to third parties and transfers or lodgments to the customers’ account in other banks on current accounts only,

Commenting on the new charges, Director, Corporate Communications, CBN, Isaac Okorafor, explained that the current NIP charges apply to use of Unstructured Supplementary Service Data (USSD), purchase with cash-back will attract a charge of N100 per N20,000 subject to cumulative N60,000 daily withdrawal. Also, for cards linked to savings account, a maintenance fee has been reduced to a maximum of N50 per quarter from N50 per month amounting to only N200 per annum instead of N600.

Furthermore, he said that there will be no more charges for reactivation or closure of accounts such as savings, current and domiciliary accounts while status enquiry at the request of the customer (like confirmation letter, letter of non-indebtedness and reference letter) will now attract a fee of N500 per request.

On Current Account Maintenance Fee (CAMF), the Guide expressly stated that this would be applicable only to current accounts in respect of customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank. It emphasized that CAMF is not applicable to Savings Accounts.

According to the Director, the CBN carried out the review of the Guide, which also prescribes charges permissible for Other Financial Institutions and non-bank financial institutions, in order to align with market developments.

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To guard against excess, unapproved or arbitrary charges by banks and other financial institutions, the Guide stipulates a penalty of N2,000,000 per infraction or as may be determined by the CBN from time to time for financial institutions that breach any provision of the guide.

The Guide also emphasized that failure by any bank to comply with CBN’s directive in respect of any infraction shall attract a further penalty of N2,000,000 daily until the directive is complied with or as may be determined by the CBN from time to time.

Consequently, the CBN directed banks to log every complaint received from their customers into the Consumer Complaints Management System (CCMS) in addition to generating a unique reference code for each complaint lodged, which must be given to the customer. Failure to log and provide the code to the customer, it added, amounts to a breach and is sanctionable with a penalty of N1,000,000 per breach.

The charges prescribed in the Guide were arrived at after extensive consultations with stakeholders and is expected to enhance flexibility, transparency and competition in the Nigerian banking industry.

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(Vanguard)

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Nigeria’s Oil Production Drops Again, Now 1.23mbpd – OPEC

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Nigeria’s crude oil production witnessed the second consecutive monthly decline since the beginning of this year, as it dropped to 1.231 million barrels per day in March, the Organisation of Petroleum Exporting Countries stated on Thursday.

OPEC disclosed this in its latest Monthly Oil Market Report for April 2024, stating that crude oil production details which it got through direct communication from Nigeria showed that the country pumped less oil in March when compared to what was produced in February.

Data from the report indicated that Nigeria produced 1.322 million barrels per day of crude in February this year, but this dropped to 1.231mbpd in March, representing a plunge of 91mbpd.

The report further stated that the country had produced 1.427mbpd of crude in January, but this was not sustained in February as it dropped in that month, while the southward oil production continued in March.

OPEC data, however, showed that the country’s average crude oil production in the first quarter of 2024 was 1.327mbpd, higher than the 1.313mbpd average oil production in the fourth quarter of 2023.

Nigeria’s first quarter oil output in 2024 was also higher than the 1.201mbpd average production in the third quarter of last year.

READ ALSO: Oil Production Rises 26.57m Bpd In February — OPEC

Oil theft and pipeline vandalism have dealt severe blows on Nigeria’s oil production, limiting the country’s output and making it fall below the volume approved for Nigeria by OPEC.

The PUNCH reported on Wednesday that the Nigerian National Petroleum Company Limited recorded 155 oil theft incidents in one week.

The report that stated the company revealed that during the review period, 53 illegal pipeline connections and 36 illegal refineries were uncovered in the Niger Delta.

“Between March 30 and April 5, 2024, a total of 155 incidents were recorded across several locations in the Niger Delta region from various incident sources,” the firm stated.

In a summary of the incidents, NNPCL stated that it recorded 53 illegal connections, discovered 36 illegal refineries and 32 wooden fibre boats, identified 14 pipeline vandalism cases, eight vessel infractions and four oil spills, as well as made seven vehicle and one vessel arrests.

Some of the incident sources include the Nigeria Agip Oil Company, Tantita Security Services Ltd, NNPCL Command and Control Centre, Shell Petroleum Development Company, NNPCL 18 Operating Ltd, among others.

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Providing additional details, the company said, “In the past week, 32 wooden boats conveying stolen crude and illegally refined products were seized and confiscated in Rivers and Delta states.

“On land, seven vehicles loaded with stolen crude were arrested in Imo, Delta and Rivers states. 53 illegal connections were uncovered between March 30 and April 5, 2024 in Bayelsa, Rivers and Delta states.

“14 cases of vandalism were also recorded in Rivers, Bayelsa and Delta states, while illegal storage sites where stolen crude and illegally refined products are kept were uncovered in Akwa Ibom, Bayelsa, Rivers and Delta states.”

The national oil company also stated there were clusters of illegal refineries in Abia State, as activities of oil thieves had devastated the effected environments in the state.

It said 36 clusters of the illegal refineries were discovered in the past week across several locations in Rivers and Abia states.

“Four cases of oil spills due to activities of vandals were recorded in the past week,” NNPCL stated, adding that in Rivers State, oil leaks from a wellhead is destroying aquatic lives.

NNPCL stated that 38 suspects were arrested during the week under review, stressing that the national oil company would not back down on the war against crude oil theft until the menace is eradicated.

READ ALSO: OPEC Cuts Nigeria’s Oil Output By 20.7% To 1.38 mb/d

Nigeria has been losing trillions of naira to crude oil theft, a development that has made some international oil companies to divest from onshore to deep offshore oil fields, while others have exited the country.

In November 2023, for instance, The PUNCH reported that the Federal Government revealed that more than N4.3tn worth of crude oil was stolen in 7,143 pipeline vandalism cases within a period of five years.

The report stated that the government disclosed this at the Nigeria International Pipeline Technology and Security Conference in Abuja, with the theme, ‘Bolstering Regulations, Technology and Security for Growth.’ The conference was organised by the Pipeline Professionals Association of Nigeria.

In a presentation at the conference by the Nigeria Extractive Industries Transparency Initiative, a Federal Government agency, the organisation revealed that oil theft and losses in Nigeria had become a national emergency.

The Executive Secretary, NEITI, Ogbonnaya Orji, said oil theft was an emergency that posed serious threat to oil exploration and exploitation with huge negative consequences on economic growth, business prospects and profit earnings by oil companies.

Providing data from the agency’s reports to back his claims, he said, “NEITI disclosed that in the last five years, 2017 to 2021, Nigeria recorded 7,143 cases of pipeline breakages and deliberate vandalism resulting in crude theft and product losses of 208.639 million barrels valued at $12.74m or N4.325tn.

“NEITI reports also disclosed that during the same period Nigeria spent N471.493bn to either repair or maintain pipelines.”
PUNCH

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Banks Get Three-month Deadline To Stop Forex-backed Loans

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The Central Bank of Nigeria on Monday stepped up its fight to boost foreign exchange liquidity in the economy with a new circular mandating Deposit Money Banks to stop the use of foreign currencies as collateral for naira loans within 90 days.

The development happened as the naira rose against the greenback at both the official and parallel markets on Monday.

The CBN has continued to deepen its battle to free dollar liquidity stocked up in the financial system by deploying various measures aimed at shoring up the naira against the United States dollar.

On Monday, the Olayemi Cardoso-led CBN issued a new circular, expressing concerns over the use of foreign currencies as collateral for naira loans.

The circular made available on its website and titled “The use of foreign-currency-denominated collaterals for naira loans”, was referenced BSD/DIR/PUB/LAB/017/004.

Although this is not the first time the bank has prohibited the use of FCY, it said it had observed the use of foreign currency by bank customers as collateral for naira loans. Hence, the decision to prohibit its use.

READ ALSO: JUST IN: CBN Sells FX To BDCs At N1,101/$1

In 2023, in a confidential letter to commercial lenders, the apex bank issued a stern directive against naira overdrafts backed by foreign currency deposits.

In the leaked letter dated August 17, 2023, and signed by the Director of Banking Supervision, Mr. Haruna B. Mustafa, the CBN said the development followed its findings from a recent supervisory review.

It was uncovered that the banks had been offering naira overdraft facilities secured with foreign currency deposits.

Despite this warning, the new directive indicates that banks have continued to engage in such practices.

In the latest circular signed by the acting Director, Banking Supervision Department, Adetona Adedeji, the apex bank said it observed the use of foreign currency by bank customers as collateral for naira loans.

As such, the regulator directed banks to trim all existing loans with foreign currency collaterals to 90 days or attract a 150 per cent capital adequacy ratio computation as part of the bank’s risk.

The new directive means a borrower may no longer use dollar deposits in their domiciliary bank accounts as collateral to obtain naira loans.

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According to stakeholders, the practice is partly due to the need to hedge against foreign currency spikes which can be costlier than interest rates.

“The Central Bank of Nigeria has observed the prevailing situation where bank customers use foreign currency as collaterals for Naira loans.

“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited except where the foreign currency collateral is Eurobonds issued by the Federal Government of Nigeria or guarantees of foreign banks, including standby letters of credit.

“In this regard, all loans currently secured with dollar-denominated collaterals other than as mentioned above should be wound down within 90 days, failing which such exposures shall be risk-weighted 150% for Capital Adequacy Ratio computation, in addition to other regulatory sanctions,” the circular read.

The CBN’s stance against such practices arises from concerns of currency mismatch, which could introduce substantial financial risks for banks.

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Rather than convert their dollars to naira, some borrowers will rather borrow in naira as the cost of buying the dollars back might be higher than the interest rate they pay for borrowing in naira.

However, this can have a ripple effect on the exchange rate due to its speculative tendencies.

The CBN maintained that it was on a mission to ensure adequate foreign exchange in the market even as the naira gains strength.

Eurobonds, according to the Hong Kong and Shanghai Banking Corporation, are bonds issued offshore by governments or corporations denominated in a currency other than that of the issuer’s country.

Eurobonds are usually long-term debt instruments and are typically denominated in US dollars.

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Letters of Credit, according to the International Trade Administration, are contractual commitments by the foreign buyer’s bank to pay once the exporter ships the goods and presents the required documentation to the exporter’s bank as proof.

As a trade finance tool, Letters of Credit are designed to protect both exporters and importers.

The PUNCH reports that in the apex bank’s previous circular to all the banks signed by its former Director, Corporate Communications Department, Ibrahim Mu’azu, the bank said its attention was drawn to the increasing use of foreign currencies in the domestic economy as a medium of payment for goods and services by individuals and corporates.

It also observed that some institutions price their goods and services in foreign currencies and demand payments in foreign currencies rather than the domestic currency (the Naira), which is the legal tender in Nigeria.

The CBN stated, “For the avoidance of doubt, the attention of the general public is hereby drawn to the provisions of the CBN Act of 2007, which states inter-alia that “the currency notes issued by the Bank shall be legal tender in Nigeria…for the payment of any amount.”

Furthermore, the Act stipulates that any person who contravenes this provision is guilty of an offence and shall be liable on conviction to a prescribed fine or six months imprisonment.

 

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JUST IN: CBN Sells FX To BDCs At N1,101/$1

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The Central Bank of Nigeria has issued a circular to Bureau De Change operators informing them of the sale of $10,000 to each BDC at a rate of N1,101/$1.

This was contained in a post on the CBN X platform , on Monday, 8th April, 2024.

The apex bank directed each BDC to sell the dollars to eligible customers at a rate not exceeding 1.5 per cent above the purchase price, implying that each BDC is not expected to sell above N1,101/$1.

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All eligible BDCs are therefore directed to commence payment of the Naira deposit to the underlisted CBN Naira Deposit Account Numbers from Today Monday April 05, 2024, and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN Branches

 

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