Banking With Less Tears (A Rejoinder) By Ebun-Olu Adegboruwa, SAN

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.