Last week, I did a piece on the struggles of Nigerians with the banking system in the country and gave some personal examples based on my own experience and some of the cases that I have handled. Subsequently, I received several calls from very good friends and well-meaning Nigerians, many of who narrated similar experiences as I did and some even worse.

From my observations on my Facebook wall, it would seem that many Nigerians are at the receiving end of the several problems afflicting the banking industry generally. So, I have reason to believe that I spoke the minds of many through the topic titled “BANKING WITH TEARS”. Amongst those that called me however is a very humble, God-fearing banker, who I have known and worked with a fairly-long time. He drew my attention to some issues and gave up valuable time to discuss with me on many of the issues raised in my piece. I will endeavor to reproduce some of them here as best as I can, by way of a rejoinder, hoping that, when you have digested them all, you would be banking with less tears.

My friend opined that there are always two sides to a story at least, and it is always good to make efforts to hear the other side before taking a decision on the events. According to him, a lot has been put in place to assist customers, in seeking and securing redress against any misconduct by any bank, one of which is the Consumer Protection Council (CPC), headed by a dynamic personality, Mr. Tunde Irukera, who is said to have transformed the plight of consumers with several cases that have been won. The idea is for all consumers, including bank customers, to take advantage of the CPC window to secure effective remedy. He insists that Nigeria operates one of the most regimented banking system in the world, with the Central Bank of Nigeria wielding the big stick against the banks, in all cases of proven wrongdoing for which some highly-placed bankers are said to have lost their jobs in consequence. In this regard, the CBN and the banks have developed a two-prong approach; a separate department for complaints was established by the CBN which makes it a point of duty to investigate and follow-up on all complaints received from bank customers. It is said that most banks dread this department in their daily operations. The second method is that the CBN has mandated all banks to maintain a customer complaint department specifically to handle all issues raised by customers, arising from their banking transactions. In this vein, every bank is expected to acknowledge and respond to all mails received from a customer, within a given time and see to it that the issue is resolved.

My friend and brother made the point about hasty generalisations, to the effect that in almost all professions and indeed all sectors of human life, there are always exceptions to the general rule and that just as there are a few bad bankers trying to ruin the good reputation of the many good ones, so also are bad and corrupt lawyers and judges, fraudulent mechanics, negligent doctors and crooked pastors. That will not be enough to paint the entire group with the brush of corruption just because a few of their members do go out of line once in a while. He insists that there are good banks in Nigeria, doing genuine clean business and they have zero tolerance for fraud and other malpractices common with some banks. It is for the customer to take a decision to migrate to another bank if his experience with his own bank is not satisfactory. There is so much competition going on within the banks that no bank can afford to be defrauding its customers or playing tricks to earn money that it does not ordinarily deserve. He obliged me with a copy of the guidelines released by the CBN to regulate bank charges, for use by all banks and other financial institutions and mobile payment operators. Anyone who operates outside these guidelines will be heavily sanctioned by the CBN and no bank is entitled to embark upon any arbitrary charge or levy without the express permission of the CBN. The banks also operate a whistle-blowing policy whereby they encourage customers to blow the alarm upon any suspicious transaction by their banks.

The point that struck me well was when he stated that Nigerian borrowers are bad borrowers. He narrated cases where some customers applied for and were granted loans with the undertaking to pay back as the business improves and profit is earned, only for them to take the loan and proceed to open another bank account to which they secretly lodged their profits whilst maintaining a zero balance with the lending bank. Some are said to take loans and divert same to other purposes, such as buying cars and even houses abroad. Examples were given of powerful citizens, businessmen and women and even political office holders, who are so connected that they are above reach or rebuke by the banking authorities and their supervisors alike. As far as he is concerned, the banks are bleeding profusely, due to the fraud being perpetrated on them by very smart borrowers and powerful customers. He says the issue of loan is purely a contractual obligation which parties willingly entered into and it will be unfair on depositors of the bank who gave out their money, to expect that any loan would not be paid back, for whatever reasons. Tied to the contract is the vexed issue of interest charges by the banks, which in most cases is compounded. My friend says the customers are only complaining when the scale tilts against them, as the banks also should complain when they pay compound interest on deposits which are sometimes rolled over with interest and the principal sum.

The banks have been careful to be content with their lot, especially when they grant credit facilities to customers to invest in property or shares and these items turn out to be good investments, some ballooning beyond the expectation of even the customers, the banks don’t turn around to harass the customer, who on such occasions take the entire harvest alone. He stated that the banking system is on auto drive and most charges and deductions have been wired to activate automatically upon certain events. Some banks have taken the extra care to add auto reversals to their financial transactions that do not succeed, and it is hardly possible for any bank to deliberately set out to defraud its customers through smart technology. I was very glad when he conceded that if a bank account is dormant, then there is no basis for charging maintenance fee on an account that is not operational. I stated in response that the automated banking system is only working in favour of the banks to the detriment of their customers. A case in point happened recently when I was to pay for books for my ward in school. I approached the bank to credit the school account through E-Transact. It later turned out that the school account was dedicated for payment of school fees only and not for books, yet I was debited by the bank and up till this moment, I have not been paid back even when it was confirmed by the same bank that the money could not be uploaded on the school payment platform.

I have handled a case wherein the bank appointed a receiver/manager, who proceeded to value a massive and expansive property for about N100,000:00, just so that he could file ‘jankara’ case at the Magistrate’s Court, claiming that the property owner was a tenant owing arrears of rent. Without proper service of court processes on the customer, the Magistrate Court entered judgment, which was executed, leading to the vandalization of the entire business, office equipment and other valuable assets, the rest of which were looted and carted away. Many other cases abound but my good friend insists that the system has provided enough mechanism to handle and address all anomalies associated with banking transactions. What then should be the solution?

He says we need a cashless society, to curb the pervasive corruption going on in the country and it should not be possible for anyone to wake up one day and be able to buy an expensive car for ten million naira with cash. It is when a society operates outside the books that people take advantage of this to steal public funds. Although genuine cashless transactions can develop unexpected hitches, it is for the customer to be well knowledgeable about his rights and the appropriate mechanisms put in place to secure remedy for him, but there is little that can be done where no complaint originates from the customer to the bank or other supervisory organs.

He then made a very frantic appeal to all Nigerians to bear it in mind that the banks have depositors whose money is invested and tied down by customers who then turn around to deploy all manner of tactics to avoid paying back their loans. He says it is only in Nigeria that a bank debtor is financing an expensive election or organizing elaborate parties to celebrate landmark events with loan obtained from the bank allegedly for business. He was very emphatic that banks are not the sole cause of business failure in Nigeria but there are associated issues of absence of infrastructure and lack of business itself, as the economy is weary and bleeding. The associated charges that customers complain of, such as the cost of stamping or registering mortgages, etc, are matters for government attention. He believes that government is solely responsible for the high cost of financial credits although it is a case of penny wise pound foolish, as if the cost is reduced by the government, then assuredly there would be many more transactions and more money for the State. Presently, most property owners have refused to process their title documents, waiting for the next available buyer to inherit that burden and it just goes on and on.

I sat down and listened to my friend attentively and as if to confirm his points, electricity supply was cut off in the course of our discussion. He spent a long time convincing me to see things from the point of view of the banks and to help push across their own side of the story, which I have faithfully done now. I will then be guilty of being a judge in my own cause should I venture to state my own honest opinion about all that my good friend has stated above. I will therefore encourage you to form your own impression and share them with me through the email provided above or through Facebook. Let the discussion continue so we can get the banking system to work better for all of us and then, we can all bank with less tears.