Saturday, December 9, 2023

BIDPA spotlights hidden banking charges in fresh study

A review of bank charges in Botswana carried out by the Botswana Institute for Development Policy Analysis (BIDPA) has shown that some commercial banks in the country do not adequately make available to its customers information relating to service charges. 

In a special briefing published in February, BIDPA said it has observed that for some of the local commercial banks, the data relating to service charges are neither readily available nor accessible to the public. 

“This phenomenon is particularly prevalent at Bank of Baroda and the State Bank of India. For instance these banks have not listed service charges for transactions such as over the counter cheque deposit and provision of a bank guaranteed cheque. Being deposit taking commercial banks, it should be a given that these banks would provide these services,” BIDPA researchers revealed. 

Another observation made by BIDPA is that although bank charges differ from one bank to the other, in some cases the differences are vast. In its data breakdown, the government think-tank shows that Standard Chartered Bank Botswana is one of the banks that is “costly” to bank with. A hypothetical basket of services used by BIDPA researchers indicates that over a twelve month period, a hypothetical customer at Standard Chartered Bank Botswana will pay a total of P890 for cumulative services which entails monthly Account maintenance fee, interim statement, copy of deposits amongst others. At the same time, its competitors First National Bank Botswana (FNBB), Barclays Bank Botswana (BBB), Stanbic Bank charge its customers P394.16, P546.88 and P514.74 respectively for similar services. A further look at the data shows that the costs for withdrawing cash from commercial banks differ by types of transactions and across different banks. 

BIDPA researchers, Johnson Maiketso and Kedibonye Sekakela have observed that, generally it is more costly to withdraw cash over the counter and through cheque encashment. The data breakdown shows that while Barclays and Standard Chartered Bank do not charge their customers for withdrawing cash through their Auto Teller Machines (ATMs) they charge P19.69 and P20.00 respectively for cash withdrawal over the counter. At the same time, a further look at other banks shows that over the counter withdrawals for FNBB and BancABC are more than seven times those for the ATMs while for Stanbic Bank the charge is more than four times. 

A comparative study carried out by BIDPA in 2003 concluded that bank service fees in Botswana were generally similar and high across the banks, making it difficult for customers to choose between them on the basis of bank charges. However BIDPA says most banks in the country should consider revising these charges to reflect the true cost of offering these services to their customers. 

At the same, BIDPA says Bank of Botswana, as the regulator must consider mechanisms to enhance consumer education including encouraging commercial banks to make information on their charges available. 

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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