Saturday, October 16, 2021

BIDPA recommends “CAP” on punitive Bank charges

With a series of little fees, levies and costly punitive interest rates, banks have over the years squeezed as much out of their customers as they could, a fresh study conducted by the Botswana Institute for Development Policy Analysis (BIDPA) has shown. 

The charges include penalties levied on the customers’ accounts, rejected bank cheques, a stop order or debit order because the customer’s account does not have adequate funds as well as ATM limits. 

To correct the abnormality, BIDPA has in its special briefing ÔÇô Review of Banks charges in Botswana suggested to Bank of Botswana, which regulates commercial banks, to consider persuading the commercial banks against levying unjustifiable high punitive charges on consumers. 

“To do this, the central bank may resort to Section 41.c of the Bank of Botswana Act which enjoins it to regulate the minimum and maximum commissions, services charges and other fees which may be levied on a y class of transactions with the public,” BIDPA noted in its study. 

Still in the same study, the BIDPA researchers unearthed fresh information that shows that in Botswana, as compared to other countries such as South Africa, Namibia and Mauritius, punitive charges are generally very high and are not tied to the amounts involved. 

The data from the research shows that unpaid debit orders and requesting stoppage of payments or processing of cheques also exhibit huge differences between the local banks. A breakdown of the study shows that for stoppage of payments, Barclays Bank Botswana and Stanbic Bank charge more than twice what the BancABC would charge for the same occurrence. At the same time, charges on dishonoured cheques as a result of insufficient funds in the customers’ accounts are very high, prompting justification for such high charges. Both Barclays Bank and Stanbic Bank charge over P300 while Standard Chartered, FNBB, Bank Gaborone and Capital Bank charge more than P200 for this occurrence. 

BIPDA researchers singled out Barclays Bank’s charge for exceeding ATM limit which stood at P135.68 at the time of research pointing out that it is high as to be incomparable with any other banks. 

“It is unclear therefore whether these charges are used by some banks as deterrent against their customers behaviour/actions or they are used to make money for the banks”. 

In late 2014, the central bank responded to the public perception about the high bank charges imposing a two year moratorium from January 2014 to December 2015. On the other hand, commercial banks also appointed a consultant to conduct a similar study to determine the differences between bank charges in Botswana compared with those prevailing in other countries in the region. Both studies are yet to be made public by the two parties.

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