Matters Arising – Banks To Stop CoT Charges From January 2016


Cost of Transactions or Commission on Turnover, popularly referred to as CoT is the authorized amount charged by a bank for every withdrawal made by a depositor from their bank account, particularly, a current account. It became a challenge when the fee became arbitrary and increasingly excessive. This made the Central Bank of Nigeria (CBN) to step in and provide a standard for the application of charges in the banking sector, to minimize conflicts between banks and their customers. One way the CBN arrested this “excessiveness” was by issuing the Guide to Bank Charges  in 2004.

However, Nigerians continued to call for the scrapping of the CoT. The reason for this was not unconnected to the fact that banks used it as an avenue to access their customers accounts, making unauthorized withdrawals in the process. Therefore, the CBN, in consultation with the Bankers Committee, Banks Discount Houses and other financial analysts and experts, moved to review the contents of the Guide to Bank Charges in 2013. It was unanimously agreed that CoT should be completely but gradually eradicated. A graduated reduction, that will roll on over the next three years was agreed upon, which would see the CoT disappear by 2016, adding that in the time being, returned cheques should not attract CoT anymore.

CBN Boss - Godwin Emenife

This formed the 36-page document called the “Revised Guide to Bank Charges,” which was posted on the apex banks’ website on March 27, 2013, and was effective from April 1, 2013. This was a very welcomed development by all and so, from N5 CoT per every one thousand naira withdrawn, it was reduced to N3 in 2013, N2 in 2014, N1 this 2015, with the expectation that it will finally be zero charges in 2016.

And true to the plan, the CBN has shown its preparedness to follow through with its decisions by announcing that beginning January 2016, banks should implement the last phase of the “Revised Guide to Bank Charges” resolutions, which is the removal of the CoT from bank customers with current accounts, which started in 2013.

But Nigerians are still worried. Indeed, many commercial bank customers have become uncomfortable because even though these efforts were made by the CBN to curb some of the subtle financial insensitivity by banks in general, some of these banks have continued to defy the directives by charging above the N1 per N1,000 turnover that was effective from January 2015, while some others developed what seemed to be “zero CoT accounts” with monthly charges that will culminate to the same amount if not more.

The CBN should find a way of curtailing the activities of these banks who have left their traditional role of assisting their customers grow their funds to now stealing from them. It should be recalled that the CBN reported that it recovered over N9 billion excess charges by banks in 2013. But unfortunately, it has gone on unabated. Nigerian banks should develop better and more genuine ways of generating funds for themselves because this trend will only make customers shy away from them and resort to keeping money in their houses, the way it was before the advent of modern banking.

At this point, it will not be just enough to give directives to banks anymore, the CBN should also impose strict sanctions on anyone found wanting, be it the bank itself or the officials who connive to perpetuate this frivolous fraud against innocent customers. This will make the banks careful to discharge their duties with honesty, integrity and sincerity.