Tel. 09-46237401 E-mail: fprd@cbn.gov.ng FPR/DIR/CIR/GEN/01/005 March 11, 2016 Circular to all Banks and Other Financial Institutions EXPOSURE DRAFT ON THE GUIDE TO CHARGES FOR BANKS AND OTHER FINANCIAL INSTITUTIONS IN NIGERIA
The Central Bank of Nigeria is currently reviewing the extant Guide to Bank Charges, which came into effect on April 1, 2013. The review, which is in line with the philosophy of periodically ensuring that the provisions of the Guide accord with current realities, also seeks to address complaints from consumers of financial services, requests for clarification on provisions of the Guide and absence of a tariff regime for other financial institutions in Nigeria.
The draft "Guide to Charges for Banks and Other Financial Institutions in Nigeria" is hereby presented as an exposure draft for your information and comments; and may be accessed from the Supervisory Policies and Guidelines page on the CBN's website, www.cbn.gov.ng. Kindly send hard copies of your comments by March 29, 2016 to the Director, Financial Policy and Regulation Department with soft copies mailed to gbcreview@cbn.gov.ng.
Thank you.
KEVIN N. AMUGO
DIRECTOR, FINANCIAL POLICY & REGULATION DEPARTMENT
DRAFT GUIDE TO CHARGES
FOR BANKS AND OTHER
FINANCIAL INSTITUTIONS
Preface
The "Guide to Charges" provides a standard for the application of charges on the various types of products and services Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs) in Nigeria offer to their customers - individuals, corporate organizations and Governments (Federal, State, Local and their Agencies).
Wide consultations with relevant stakeholders were considered in arriving at the charges prescribed in the Guide. The intendment of this Guide is to enhance flexibility, transparency and competition in the Nigerian economy.
Where a charge is stipulated as "negotiable", DMBs and OFIs are required to appropriately draw the attention of their customers to its consequence and the two parties should mutually agree on the applicable interest and charge. All commissions, charges and rates stated in this Guide are subject to relevant taxes.
Although the Guide provides for charges on various products and services of DMBs and OFIs, it is not exhaustive. Banks and OFIs are mandated to present any new product, service and charge(s) not covered by this Guide to the Central Bank of Nigeria for prior approval.
A glossary of terms is introduced to provide users with an explanation of the words/terminologies used in the Guide.
This Guide to Charges for Banks and OFIs which replaces the Guide to Bank Charges issued in 2013 takes effect from (month), 2016, and may be reviewed from time to time to reflect changes in the business environment.
| Contents | Page |
|---|
| DRAFT GUIDE TO CHARGES FOR BANKS AND OTHER FINANCIAL INSTITUTIONS | |
| PREFACE | |
| PART 1: DEPOSIT MONEY BANKS . | |
| SECTION 1: | INTEREST ON DEPOSITS . |
| INTEREST RATES AND LENDING FEES . |
| SECTION 2: | |
| SECTION 3: | COMMISSION ON TURNOVER |
| SECTION 4: CURRENT ACCOUNT MAINTENANCE FEE | |
| SECTION 5: | COMMISSION ON BONDS GUARANTEES & INDEMNITIES, ETC. |
| SECTION 6: | FOREIGN EXCHANGE COMMISSION/CHARGES . |
| SECTION 7: | BILLS FOR COLLECTION |
| SECTION 8: | STRAIGHT FORWARD HANDLING OF DOCUMENTS. |
| SECTION 9: | INWARD AND OUTWARD LETTERS OF CREDIT |
| SECTION 10: | INTERNAL TRANSACTIONS (within Nigeria) |
| SECTION 11: | ELECTRONIC BANKING |
| SECTION 12: | MISCELLANEOUS |
| PART 2: OTHER FINANCIAL INSTITUTIONS. | |
| PART 2 (A): MICRO-FINANCE BANKS | |
| SECTION 1: INTEREST ON DEPOSITS | |
| SECTION 2: | |
| SECTION 3: CURRENT ACCOUNT MAINTENANCE FEE | |
| SECTION 4: COMMISSION ON GUARANTEES & INDEMNITIES . | |
| SECTION 5: INTERNAL TRANSACTIONS (within Nigeria) . | |
| SECTION 6: ELECTRONIC BANKING | |
| SECTION 7: MISCELLANEOUS | |
| PART 2 (B): PRIMARY MORTGAGE BANKS . | |
| SECTION 1: INTEREST ON DEPOSITS . | |
| SECTION 2: INTEREST RATES AND LENDING FEES | |
| SECTION 3: CURRENT ACCOUNT MAINTENANCE FEE | |
| SECTION 4: MISCELLANEOUS | |
| PART 2 (C): FINANCE COMPANIES | |
| 3 |
| SECTION 1: INTEREST ON BORROWINGS | | |
|---|
| SECTION 2: INTEREST RATES AND LENDING FEES | | |
| SECTION 3: MISCELLANEOUS | | |
| PART 3 - GLOSSARY | | |
| PART 4 - MINIMUM DISCLOSURE REQUIREMENTS IN OFFER LETTERS FOR CREDIT FACILITIES /LOANS ... 60 | | |
| 1. | CONSUMER LOANS |
| 2. | MORTGAGE LOANS |
| 3. | OVERDRAFTS |
| MINIMUM DISCLOSURE REQUIREMENTS FOR CONTINGENT LIABILITIES | | |
PART 1: DEPOSIT MONEY BANKS
Section 1: Interest On Deposits
| DESCRIPTION | RATE |
|---|
| 1.1 | Current account in credit balance | Negotiable |
| 1.2 | Savings accounts | Minimum of 30% of MPR p.a. (Subject to Maximum of 4 Withdrawals in a Month) |
| 1.3 | Term Deposit Accounts | Negotiable |
| 1.4 | Domiciliary Accounts: 1.4.1 Current Accounts | Minimum of 0.50% per annum p.a |
| 1.4.2 | Savings Accounts | Minimum of 0.50% per annum |
| 1.5 | Deposits held as collateral | Negotiable subject to minimum of 30% of MPR p.a. |
| DESCRIPTION | RATE |
|---|
| 2.1 | Lending Rate1 : 2.1.1 Local Currency Loans | Negotiable (the rate should anchor MPR, reflecting the risk-based pricing model). Also, when there is a change in agreed rate, the customer must be notified within 5 business days in advance of the application of the new rate. |
| 2.1.2 Interest Rate - Foreign currency | Negotiable (reference to LIBOR) | |
| Loans 2.1.3 Interest on authorized OD | Negotiable (the rate should anchor MPR, reflecting the risk-based pricing model). Also, when there is a change in agreed rate, the customer must be notified within 5 business days in advance of the application of the new rate | |
| 2.1.4 Interest on excess over | 1% flat on unpaid amount per month in addition to | |
| authorized OD limit | charging current rate of interest on outstanding debt (without prejudice to the provisions of the Prudential Guidelines on the limitation of accruals) | |
| 2.1.5 Unauthorized OD/Credit | Not permissible, except as a result of loan repayments (Principal and Interest) | |
| 2.1.6 Drawing against Uncleared | Negotiable | |
| Effects 2.1.7 Equipment Leasing | Negotiable Negotiable | |
| 2.1.8 Discountable instruments e.g. Usance bill, Bankers' Acceptance, Commercial Papers, Promissory Notes | | |
| | |
1 Seven (7) days from the date of execution, shall be allowed within which loan contracts can be rescinded.
| etc. | | |
|---|
| 2.2 | Lending Fees | Negotiable subject to maximum of 1% of the principal amount granted (one off charge). |
| 2.2.1 Management fee2 : It covers processing and appraisal fee (one-off charge). 2.2.2 Renewal Fee3 | Negotiable subject to maximum of 0.25% flat (one-off upon renewal) | |
| 2.2.3 Facility Restructuring Fee | Negotiable, subject to a maximum of 0.25% on the outstanding amount being restructured (one off charge). | |
| 2.2.4 Penal (Default) Rate | 1% flat on unpaid amount per month in addition to charging current rate of interest on outstanding debt (without prejudice to the provisions of the Prudential Guidelines on the limitation of accruals) | |
| Penal rate for past due loans & advances and excess over limit NOTE: Seven (7) days shall be allowed within which there will be no penal charge on late repayments. 2.2.5 Commitment Fee | Negotiable, subject to a maximum of 0.5% on the undisbursed amount (one-off charge) | |
| 2.2.6 Advisory/Consultancy fee | Negotiable (only applies where there is a written advisory/consultancy agreement between the bank and the customer) | |
| 2.2.7 Credit Reference Reports | Cost recovery | |
| NOTE: Applicable for only customerinduced credit reference reports. | | |
| 2.3 | Interbank Borrowing rate: | |
2 NOTE ON MANAGEMENT: Chargeable for all fresh requests granted. The charge also applies each time an additional amount is granted but only for the additional amount. No charges for requests declined.
3 RENEWAL FEE: Chargeable for renewals granted. No charges for requests declined.
| 2.3.1 Overnight /Call money | Negotiable | |
|---|
| 2.3.2 Tenured | Negotiable | |
| 2.4 | Charges for Consortium Lending 2.4.1 Agency Fee | Negotiable |
| 2.4.2 Management Fee | Negotiable subject to a maximum of 0.5% of principal amount (One–off charge) | |
| 2.4.3 Commitment/Non-Drawing Fee | Negotiable subject to a maximum of 0.5% of the undisbursed amount (one-off charge) | |
| 2.4.4 Renewal Fee | Negotiable, subject to a maximum of 0.25% of the principal( One-off charge upon renewal) | |
| 2.4.5 Commission charges for | Negotiable | |
| underwriting services | | |
Section 3: Commission On Turnover
| DESCRIPTION | RATE |
|---|
| Commission on Turnover | Zero COT with effect from January 2016 | |
| 3.1 | 3.1.1 COT applies to customer-induced debit transactions on current accounts. The banks should not charge COT on returned outward clearing cheques, reversal of transactions and all bank-induced debits Note: Gradual phase-out of COT from N3 (2013) to N2 (2014) to N1 (2015), and N0 (2016) 3.1.2 Loan repayment from current or | Nil |
| savings account | Nil | |
| 3.1.3 Debits representing transfer to other accounts in the same name, in the same branch or at another branch of the same bank | | |
| 3.2 | Cost of Cheque Books 3.2.1 Cheque Books | Cost recovery |
| 3.2.2 Counter Cheque | N50 per leaflet | |
| DESCRIPTION | RATE | |
|---|
| 4.1 | Current Account Maintenance Fee (CAMF) | Negotiable subject to a maximum of N1 per mille |
| 4.1.1 Current Account Maintenance Fee applies to customer-induced debit transactions on current accounts. Banks should not charge Current Account Maintenance fee on returned outward clearing cheques, reversal of transactions and all bank-induced debits 4.1.2 Loan repayment from current or | No charge | |
| savings account | No charge | |
| 4.1.3 Debits representing transfer to other accounts in the same name, in the same branch or at another branch of the same bank | | |
Section 4: Current Account Maintenance Fee Section 5: Commission On Bonds Guarantees & Indemnities, Etc.
| DESCRIPTION | RATE | |
|---|
| 5.1 | Bid/Tender Bond | (Bid Security) | Negotiable subject to a maximum of 1% of the Bond value (one-off charge) |
| 5.2 | Performance bond (chargeable from | Negotiable subject to a maximum of 1% of the Bond | |
| date of contingent liability) | value (one-off charge) | |
| 5.3 | Advance Payment Guarantee (APG) | Negotiable subject to a maximum of 1% of the APG value (one-off charge) | |
| (chargeable from date of contingent liability) | | |
| 5.4 | Third-party Cheque Indemnities | To be discouraged - However, negotiable for nonclearing financial institutions e.g. Micro-finance banks | |
| 5.5 | Bank Guarantees | Negotiable subject to a maximum of 1% (one-off charge) | |
| 5.6 | Other Bonds, Guarantees and | Negotiable subject to a maximum of 1%, (one-off) | |
| Indemnities | | |
Section 6: Foreign Exchange Commission/Charges
| DESCRIPTION | RATE | |
|---|
| Purchases: | | |
| 6.1 | Purchases from CBN | As may be prescribed by the CBN from time to time. |
| 6.2 | Inter-bank purchases | Negotiable subject to a maximum spread of 50 Kobo per US Dollar, between the Bid and Offer Rate No charge |
| 6.3 | Inward Telegraphic/SWIFT and other transfers expressed in foreign currency | |
| 6.4 | Travellers Cheques, Cheques and Sight Bills for negotiation: 6.4.1 Travellers' Cheques | As advised by CBN |
| (TCs for pilgrimage are specially arranged for by the CBN) 6.4.2 Third Party Cheques | Minimum of N1,000 subject to a maximum of 1% of the value of the cheque | |
| 6.4.3 Sight Bills | Minimum of N1,000 subject to a maximum of 1% of the value of the bill | |
| 6.4.4 Usance Bills | Minimum of N1,000 subject to a maximum of 1% of the value of the bill | |
| 6.5 | Foreign Currency purchases from | Interbank foreign exchange rate |
| customers Sales: | | |
| 6.6 | Outward Telegraphic/SWIFT and | SWIFT cost recovery only |
| other transfers | | |
| 6.7 | Foreign currency sales to customers | Interbank foreign exchange rate plus a margin of 0.5% |
|---|
| 6.8 | Commission on FCY cash withdrawals/Withdrawals from Domiciliary Accounts other than cash: 6.8.1 Current account | Negotiable, subject to a maximum of 0.1% of transaction value, subject to maximum of Naira equivalent of US $10 |
| 6.8.2 Savings account | Negotiable, subject to a maximum of 0.1% of transaction value, subject to maximum of Naira equivalent of US $10 |
| 6.9 | Foreign draft purchase | 0.1% of the value of the cheque + Offshore charges |
| 6.10 | Collection Charge on Cheques | 1% of cheque value or Naira equivalent of US $10 whichever is lower |
Section 7: Bills For Collection
| DESCRIPTION | RATE | |
|---|
| Bills for collection (Inward) | | |
| 7.1 | Collection: 7.1.1 Commission on Bills for | Negotiable subject to a maximum of 1% of the bill |
| Collection | value | |
| 7.1.3 Postage (where applicable) | Actual cost of postage | |
| 7.1.4 Communication charge (where | Actual cost of communication | |
| applicable) | N5,000 per month | |
| 7.2 | Holding charges after non-payment or non-acceptance, chargeable one month after arrival of goods: | |
| 7.3 | Sharing of commission on handling charges in respect of collection: 7.3.1 Presenting Bank | 25% |
| 7.3.2 Collecting Bank | 75% | |
| 7.4 | Extension charges for accepted or | N3,000 per bill |
| sight bills altered to tenure bills | | |
| 7.5 | Protest charges plus Notary Public | Cost of Postage |
| Fees Bills for Collection (Outward) | | |
| 7.6 | Collection commission 7.6.1 Commission on Bills for | Negotiable subject to a maximum of 1% |
| Collection | | |
| 7.7 | Bills for Collection - Negotiation | Negotiable |
Section 8: Straight Forward Handling Of Documents
| DESCRIPTION | RATE |
|---|
| 8.1 | Export Documents Delivery | Negotiable subject to a maximum of N5,000 plus cost of courier |
| 8.2 | Import Documents: 8.2.1 Delivery | Negotiable subject to a maximum of N5,000 plus cost of courier |
| 8.2.2 Bills for acceptance and return to | Negotiable subject to a maximum of N5,000 plus cost | |
| Principals | of courier | |
| 8.2.3 Bills for Collection due for | Cost of courier | |
| payment | | |
Section 9: Inward And Outward Letters Of Credit
| DESCRIPTION | RATE | |
|---|
| Inward Letters of Credit (Export) | | |
| 9.1 | Processing and Registration of | N5,000 flat |
| Nigerian Export (NXP) Form | | |
| 9.2 | Advising Commission: | N5,000 flat |
| 9.2.1 Where a Nigerian bank simply verifies authenticity of the Credit and delivers same. | 0.05% of the value, subject to a minimum of Naira equivalent of US $25 | |
| 9.2.2 Where a Nigerian bank has to rewrite the Credit at the instance of the customer | | |
| 9.3 | Confirming Commission | Minimum of N5,000 subject to a maximum of 1% of the face value. |
| 9.4 | Transferable Credits, Transferable and Divisible Credits (part-shipment): | 0.5% of face value subject to a minimum of Naira equivalent of US$25 |
| 9.4.1 Where all or part of a credit is transferred, the charges (paid by the original beneficiary) are based on the amount transferred | Negotiable | |
| 9.4.2 Negotiation of LC Documents (Commission plus interest, if applicable, at local rate) Outward Letters of Credit (Import) | | |
| 9.5 | Purchase of Forms A | N100 per form |
| 9.6 | Form M: 9.6.1 Processing | N1,000 in addition to maintenance fee on e-Form platform in line with CBN directive |
| 9.6.2 Amendment | Negotiable subject to a maximum of N5,000 | |
|---|
| 9.6.3 Revalidation/ Extensions | Negotiable subject to a maximum of N5,000 | |
| 9.7 | LC Establishment Commission 9.7.1 For credits up to 180 days | 1% of face value |
| 9.7.2 For credits up to 270 days | 1.25% of face value 1.5% of face value | |
| 9.7.3 For credits up to 360 days (these charges are on the period of validity of the credit) | | |
| 9.8 | Renewal, extension and Increase in the LC value: 9.8.1 Renewals4 | Commission on Applicable LC establishment |
| 9.8.2 Extensions5 | N5,000.00 flat | |
| 9.9 | Increases or Enhancements: | Additional establishment commission should be charged on the amount of any increase for the unexpired period of validity of credit (in line 9.7 above) |
| 9.10 | Amendment of LC at the instance of | N2,000 per application |
| the customer | | |
| 9.11 | Usance Bill under Credit Guarantee Commissions: 9.11.1 Where the bill is less than one | N3 per mille per month |
| year 9.11.2 Where the bill exceeds one year | N5 per mille per month | |
| 9.12 | Pre-Arrival Assessment Report (PAAR) | N 2,500.00 flat |
4Credits may be renewed not later than the 15th day following expiry only on payment of full Establishment Commission.
5 Where a letter of credit is extended for a period in excess of 12 months from the date of establishment, a Reestablishment Commission of 1% is payable
Section 10: Internal Transactions (Within Nigeria)
| DESCRIPTION | RATE |
|---|
| 10.1 | Bank Drafts 10.1.1 Customer | Current Account: - N300; and Savings Account: - N500 |
| 10.1.2 Non-Customer | N500 + 0.1% of Draft value |
| 10.2 | Draft Repurchase | No charge |
| 10.3 | Transfers within Nigeria: 10.3.1 Intra-Bank/Intra-Scheme | No charge |
| Transfers 10.3.2 in-Branch Inter-Bank/InterScheme Funds Transfer excluding RTGS (carried out by bank on behalf of the customer) Below N10,000,000 | N200 |
| N10,000,000 and above | N500 N200 |
| 10.3.3 Transfers from account holders to non-account holders, subject to a maximum of N30,000 per beneficiary per day (sender to pay) | 0.2% of the value of the transaction, subject to a minimum of N200. However, banks are enjoined to undertake KYC on such customers |
| 10.4 | Charges paid by non-account holders for initiating cash transactions (e.g. local money transfer, Prepaid Card loading) | |
| 10.5 | Cash handling charge | Extant CBN policy on the subject applies |
| 10.6 | Special Clearing of Cheques | Negotiable |
| 10.7 | Standing Order Charge (In-Branch) at | (a) Intra-bank N300 (One-off) |
| the instance of the customer | (b) Inter- bank N300 (one-off) plus applicable inBranch Inter-Bank Funds Transfer charge |
| 20 | |
| 10.8 | Direct Debit | CBN extant policy applies | |
|---|
| 10.9 | Safe Custody | Negotiable | |
| 10.10 | Stopped Cheques | N500.00 per order | |
| 10.11 | Purchase/sale of Treasury Bills for | (a) Processing fee - N100 flat (b) Custodian fee - in line with extant Guidelines on | |
| customers | | Custodianship on Money Market and Other Fixed Income Instruments (applicable on Treasury bills purchase) |
| | (c) | Settlement of trade via S4 - Cost recovery |
Section 11: Electronic Banking
| DESCRIPTION | RATE | |
|---|
| 11.1 | Internet Banking: 11.1.1 Hardware Token | Maximum of N2,500 (one-off charge) |
| 11.1.2 Software Token - One Time | No Charge | |
| Password (OTP) 11.1.3 Hardware Token replacement | Maximum of N2,500 (Customer to bear cost only in the event of physical damage and loss of token) | |
| 11.1.4 Bills Payment (Including Bills | Negotiable subject to a maximum of the lower of | |
| Payment through other E-channels) | 0.75% of transaction amount or N1200 (Biller/Merchant to pay) | |
| 11.2 | Electronic Funds Transfer: 11.2.1 Below N10,000,000 | N60 |
| 11.2.2 N10,000,000 and above | N300 | |
| 11.2.3 RTGS | N550 | |
| 11.3 | Annual Card Maintenance Fee 11.3.1 Foreign Currency | N4,200 pa |
| Denominated Cards 11.3.2 Naira debit card maintenance | N50 monthly | |
| charges | | |
| 11.4 | Credit Card Charges: 11.4.1 Interest charges | Negotiable |
| 11.4.2 International withdrawals (per | Exact cost by international acquirer (Cost Recovery) | |
| transaction) | | |
| 11.5 | Debit Card Charges: 11.5.1 Issuing Fee | N1,000 (one-off charge)22 |
| 11.5.2 International withdrawals (per | Exact cost by international acquirer (Cost Recovery) |
|---|
| transaction) 11.5.3 Prepaid card | No charge |
| 11.6 | ATM Transactions: 11.6.1 Within the bank | No charge |
| 11.6.2 On other banks ATMS | N65 after the third withdrawal within the same month |
| 11.7 | Mobile Payments: 11.7.1 Inter- Scheme Funds Transfer | N100 |
| 11.7.2 Intra-Scheme Funds Transfer | N100 |
| 11.7.3 Cash-out (to be borne by the | N100 |
| sender) 11.7.4 Mobile Money Card Issuance | N1000 N100 |
| 11.7.5 Cash-in through an Agent (Offus) | |
| 11.8 | Point of Sales (PoS): 11.8.1 General Merchant (Including | 0.75% of transaction value subject to a maximum of |
| Domestic Travels) | N1,200 (Merchant to Pay) |
| 11.8.2 Travels (International) and | Negotiable subject to a maximum of 3% of transaction |
| Entertainment | value (Merchant to Pay) Negotiable subject to a maximum of N50 per beneficiary payable by the sender |
| 11.9 | Bulk Payments (e.g. Salaries, Dividends etc): | |
| 11.10 | Mandatory alert - either SMS or email depending on customer's preference: 11.10.1 SMS alert | Not more than NCC rate (Fees on alerts are restricted to only customer induced transactions). All associated 23 |
| charges relating to a particular transaction should be consolidated into a single SMS alert. | |
|---|
| 11.10.2 Email notification | No charge | |
| 11.11 | PIN reissue | No charge |
| 11.12 | PIN reset | No charge |
| 11.13 | Use of Unstructured Supplementary | No charge |
| Service Data (USSD) | | |
Section 12: Miscellaneous
| DESCRIPTION | RATE | |
|---|
| 12.1 | Reactivation of accounts | No charge |
| 12.2 | Closure of Accounts: 12.2.1 Savings | No charge |
| 12.2.3 Current | No charge | |
| 12.3 | Insurance Premium paid on behalf | Exact Premium (Customer to choose from a list of at |
| of customers | least 3 Insurance Companies to be recommended by the bank) | |
| 12.4 | Issuance of statement of account: | No charge |
| 12.4.1 Mandatory monthly issuance of statement of account on current and savings accounts6 | Maximum of N20 per page | |
| 12.4.2 Special request for statement of account (request in a manner other than agreed on mandatory issuance) | | |
| 12.5 | Returned Cheques: 12.5.1 Due to reasons other than | No charge |
| the account being unfunded 12.5.2 Due to the account being | 1% of amount, minimum of N5,000 (to be borne by | |
| unfunded | drawer only). This is without prejudice to the Dud Cheque Act | |
| 12.6 | Business visit initiated by customer: 12.6.1 Local | No charge |
| 12.6.2 Foreign | Negotiable | |
| | |
6Bank and customer should agree on mode of transmission of statement
| 12.7 | Status enquiry at the request of | N 500 per request | |
|---|
| customer | | | |
| 12.8 | Verification of customers' documents with Government Agencies: | Cost recovery | |
| 12.8.1 Search | at | Corporate | |
| Affairs Commission (CAC), land registry, legal search etc | | |
| 12.8.2 Obtaining | Certified | True | Cost recovery |
| Copy (CTC) | | |
| 12.8.3 Perfection of security for | Cost recovery | | |
| credit facilities. | N500 plus Cost of Postage if applicable | |
| 12.9 | Confirmation of overseas enquiries to correspondent bank at the instance of the customer | | |
| 12.10 | Intermediation fees for commercial | Negotiable | |
| papers (to be borne by the issuer) | | | |
| 12.11 | Issuance of withdrawal | No charge | |
| Booklet/Passbook | | | |
| 12.12 | Customized deposit booklet | Cost Recovery No charge | |
| 12.13 | Over-the-counter cash withdrawals below the limit set by the CBN cash withdrawal/lodgement policy | | |
| 12.14 | Inter-branch cash | No charge | |
| Deposits/withdrawals | | | |
PART 2: OTHER FINANCIAL INSTITUTIONS
PART 2 (A): MICRO-FINANCE BANKS
Section 1: Interest On Deposits
| DESCRIPTION | RATE |
|---|
| 1.1 | Current accounts | Negotiable |
| 1.2 | Savings accounts | Minimum of 30% of MPR p.a. (Subject to Maximum of 4 Withdrawals in a Month) |
| 1.3 | Term Deposit Accounts | Negotiable |
| DESCRIPTION | RATE |
|---|
| 2.1 | Interest Rate on loans, authorised overdrafts and other advances/facilities | Negotiable subject to a maximum of 3% per month. Also, when there is a change in agreed rate, the customer must be notified within 5 business days in advance of application of the new rate. |
| Note: Seven (7) days from the date of execution, shall be allowed within which loan contracts can be rescinded | |
| 2.2 | Unauthorized Overdraft | 1. Not permissible except overdraft occasioned by loan and advances repayment and interest 2. Interest charge should be bank's lending rate plus penal rate (in line with 2.8 below) |
| 2.3 | Drawing against Uncleared Effects | Negotiable |
| 2.4 | Micro Leasing/Microfinance-related | Negotiable |
| Hire purchase Lending Fees | |
| 2.5 | Facility Restructuring Fee (Restructuring | Negotiable, subject to a maximum of 0.50% on the |
| at the instance of customer) | outstanding amount being restructured (one off charge). |
| 2.6 | Management fee: It covers processing and appraisal fee (one-off charge). | Negotiable subject to maximum of 1% of the principal amount granted (one off charge). |
| Chargeable for all fresh requests granted. The charge also applies each time an additional amount is granted but only for the additional amount. No charges for requests declined. | |
| 2.7 | Renewal Fee: | Negotiable subject to maximum of 0.5% (one-off charge per renewal) |
| Chargeable for renewals granted. No charges for requests declined. | |
| | 1% flat on unpaid instalment per month in addition to charging current rate of interest on outstanding debt (without prejudice to the provisions of the Revised Regulatory & Supervisory Guidelines for MFBs) |
|---|
| 2.8 | Penal/Default rate for Late Repayment of loans, authorised overdrafts, micro leases, microfinance-related hire purchase and other advances/facilities, (Default or Penalty Rate) NOTE: Seven (7) days shall be allowed within which there will be no penal charge on late repayments. | |
| 2.9 | Commitment Fee: | Negotiable, subject to a maximum of 1% of the Undisbursed amount (one-off charge) |
| A fee charged by a financial institution for an undisbursed facility in order to keep the line of credit open | | |
| 2.10 | Advisory/Consultancy fee | Negotiable. But only applies where there is a written advisory/consultancy agreement between the bank and the customer |
| 2.11 | Credit Reference Reports | Cost recovery |
| NOTE: Applicable for only customerinduced credit reference reports. | | |
| 2.12 | Charges for Consortium Lending 2.12.1 Agency Fee | Negotiable |
| 2.12.2 Management Fee | | Negotiable |
| 2.12.3 Commitment/Non-Drawing Fee | | Negotiable subject to a maximum of 1% of the undisbursed amount |
| 2.12.4 Renewal Fee | | Negotiable, subject to a maximum of 0.5% of the principal |
| 2.12.5 Commission charges for | | Negotiable |
| underwriting services 2.12.6 Participation Fee to be shared by | | Negotiable |
| Micro-Finance Banks | | |
Section 3: Current Account Maintenance Fee
| DESCRIPTION | RATE | |
|---|
| 3.1 | Current Account Maintenance fee: | Negotiable subject to a maximum of N1 per mille |
| 3.1.1 Current Account Maintenance fee applies to customer-induced debit transactions on current accounts. The banks should not charge Current Account Maintenance fee on returned outward clearing cheques, reversal of transactions and all bank-induced debits 3.1.2 Loan repayment from current or | No charge | |
| savings account | No charge | |
| 3.1.3 Debit representing transfer to another account of the same customer in the same bank Cost of Cheque Books: | | |
| 3.2 | Cheque Books | Cost recovery |
| 3.3 | Counter Cheque | N100 per leaflet |
Section 4: Commission On Guarantees & Indemnities
| DESCRIPTION | RATE | |
|---|
| 4.1 | Advance Payment Guarantee (APG) | Negotiable subject to a maximum of 1% of the APG value (one-off charge) |
| 4.2 | Guarantees and Indemnities | Negotiable subject to a maximum of 1%, minimum of N1,000 (one-off charge) |
Section 5: Internal Transactions (Within Nigeria)
| DESCRIPTION | RATE | |
|---|
| 5.1 | Bank Drafts 5.1.1 Customer | N350 |
| 5.1.2 Non-Customer | N550 | |
| 5.2 | Draft Repurchase | No charge |
| 5.3 | Transfers within Nigeria: 5.3.1 Intra-bank/Intra-Scheme Transfers | No charge |
| 5.3.2 Inter-bank/Inter-Scheme Transfers | Correspondent bank's charge plus N50 | |
| 5.3.3 Transfers to non-account holders, | Correspondent bank's charge plus N50 | |
| subject to Tiered-KYC requirements | Correspondent bank's charge plus N50 | |
| 5.4 | Non-account holders' cash transactions (e.g. local money transfer, cash card loading), subject to Tiered-KYC requirements. | |
| 5.5 | Cash handling charge | Extant CBN policy on the subject applies |
| 5.6 | Special clearing of cheques | Negotiable |
| 5.7 | Standing Order Charge (In-Branch) at the instance of the customer 5.7.1 Intra-bank | N200 (One-off) |
| 5.7.2 Inter- bank | N200 (one-off) plus recurring external transfer cost applicable (correspondent bank charge) | |
| 5.8 | Direct Debit | Correspondent bank's charge plus N50 |
| 5.9 | Safe Custody | Negotiable |
| 5.10 | Stopped cheques | N500.00 per order |
| DESCRIPTION | RATE | |
|---|
| 6.1 | Internet Banking Token: 6.1.1 Hardware Token | Maximum of N3,000 (one-off charge) |
| 6.1.2 Software Token (OTP) | No Charge | |
| 6.1.3 Hardware Token Replacement | Maximum of N3,000 Customer to bear cost only in the event of physical damage or lost token | |
| 6.2 | Electronic Funds Transfer: 6.2.1 Below N10,000,000 | N100 |
| 6.2.2 N10,000,000 and above | N500 | |
| 6.2.5 Bills Payment | Negotiable subject to a maximum of the lower of 0.75% of transaction amount or N1,200 (Biller/Merchant to pay) | |
| 6.2.6 Usage of USSD Code for | No charge | |
| transactions | Only applicable transfer/transaction charges apply | |
| 6.3 | Debit Card Charges: 6.3.1 Issuing Fee | N1,000 (one-off charge) |
| 6.3.2 ATM Bill Payment | N100 | |
| 6.3.3 Debit card maintenance charges | N100/Month, applicable only to month card is used | |
| 6.3.4 Prepaid card loading/unloading | No charge | |
| 6.4 | ATM Transactions: 6.4.1 Within the bank | No charge |
Section 6: Electronic Banking
| 6.4.2 On other banks ATMS | N65 after the third withdrawal within the same month | |
|---|
| 6.4.3 On approved Independent ATMs | No charge | |
| 6.5 | Mobile Payments: 6.5.1 Interbank/Inter-Scheme Funds | N100 |
| Transfer 6.5.2 Intra-bank/Intra-Scheme Funds | N100 | |
| Transfer 6.5.3 Bill payment | N100 | |
| 6.5.4 Cash-out Agent (to be borne by the | N100 | |
| sender) 6.5.5 Cash-out Branch (to be borne by | N100 | |
| the sender) 6.5.6 Mobile Money Card Reissue | N300 | |
| 6.5.7 Deposit at Agent | N100 | |
| 6.6 | Point of Sales (PoS): 6.6.1 General Merchant | 0.75% of transaction value subject to a maximum of N1,200 |
| 6.6.2 Hotels | Negotiable subject to a maximum of 3% of transaction value | |
| 6.6.3 Airline operators | Negotiable subject to the lower of 1.25% of transaction value or N2,000 | |
| 6.7 | Bulk Payments Electronic Funds Transfer: 6.7.1 Salary payment | Negotiable subject to a maximum of N100 per employee payable by the employer |
| 6.7.2 Vendor payments (payable by the | N100 | |
| vendor) | | |
| 6.7.3 Single payments | No charge | |
|---|
| 6.7.4 Utility payments | No charge | |
| 6.7.5 Tax payments | No charge | |
| 6.8 | Mandatory alert - either SMS or email depending on customer's preference: 6.8.1 SMS alert | NCC Rate. Only applicable to transactions directly induced by customers. All associated charges relating to a particular transaction should be consolidated into a single sms alert. |
| Fees on alerts are restricted to only customer induced transactions 6.8.2 Email notification | No charge | |
| SECTION 7: MISCELLANEOUS DESCRIPTION | | RATE |
|---|
| 7.1 | PIN reissue | N100 |
| 7.2 | PIN reset | No charge |
| 7.3 | Reactivation of accounts | No charge |
| 7.4 | Closure of Accounts | No charge |
| 7.5 | Insurance Premium paid on behalf of | Exact Premium (Customer to negotiate with the |
| customers | insurance company) |
| 7.6 | Issuance of statement of account: | No charge |
| 7.6.1 Mandatory monthly issuance of statement of account on current and savings accounts MFB and customer should agree on mode of transmission of statement (pick options from uniform account opening form) | Maximum of N50 per page |
| 7.6.2 Special request for statement of account (request in a manner other than agreed on mandatory issuance) | |
| 7.7 | Business Visit | No charge N500 per request. |
| 7.8 | Status enquiry at the request of customer (e.g. Confirmation Letter, Embassy Letter, Reference Letter, Letter of Indebtedness/Non-indebtedness etc.) | |
| 7.9 | Verification of customers' documents with Government Agencies: | Cost recovery |
| 7.9.1 | Search at Corporate Affairs |
| Commission (CAC), land registry, Legal Search, etc | |
| 7.9.2 | Obtaining Certified True Copy | Cost recovery |
|---|
| (CTC) | Cost recovery | |
| 7.9.3 | Perfection of security for credit | |
| facilities, Deed of Assignment, Deed of Release etc. | | |
| 7.10 | Issuance of withdrawal | Cost recovery |
| Booklet/Passbook | | |
| 7.11 | Customized deposit booklet | Negotiable No charge |
| 7.12 | Over-the-counter cash withdrawals below the limit set by the CBN cash withdrawal/lodgment policy | |
| 7.13 | Inter-branch cash Deposits/withdrawals | No charge |
| 7.14 | Minimum amount for opening accounts | Subject to the CBN three-tiered KYC requirements |
PART 2 (B): PRIMARY MORTGAGE BANKS
Section 1: Interest On Deposits
| DESCRIPTION | RATE | |
|---|
| 1.1 | Current accounts (Mortgage-focused) | Negotiable |
| 1.2 | Savings accounts | Minimum of 30% of MPR p.a. (subject to a maximum of 4 withdrawals in a month) |
| 1.3 | Term Deposit Accounts | Negotiable |
| DESCRIPTION | RATE | |
|---|
| 2.1 | Interest Rate on: 2.1.1 NHF Loan | 6% per annum as prescribed for NHF loans (No additional interest is allowed). Note that the 6% is shared as follows: Contributors: 2% FMBN: 2% PMB: 2% |
| 2.1.2 Real Estate Construction Finance | Negotiable | |
| 2.1.3 Mortgage Finance | Negotiable | |
| 2.2 | Lending Fees 2.2.1 Facility Restructuring Fee (Restructuring at the instance of customer) | Negotiable, subject to a maximum of 0.50% on the outstanding amount being restructured (one off charge). Negotiable subject to maximum of 1% of the principal amount granted (one off charge). |
| 2.2.2 Management fee: It covers processing and appraisal fee (one-off charge). Chargeable for all fresh requests granted. The charge also applies each time an additional amount is granted but only for the additional amount. No charges for requests declined. 2.2.3 Renewal Fee: | Negotiable subject to maximum of 0.5% (one-off charge per renewal) | |
| Chargeable for renewals granted. No charges for requests declined. | | |
| 2.2.4 Penal/Default rate for Late Repayment of loans | 1% flat on unpaid instalment per month in addition to charging current rate of interest on outstanding debt (without prejudice to the provisions of the Revised Guidelines for PMBs in Nigeria) | |
|---|
| NOTE: Seven (7) days shall be allowed within which there will be no penal charge on late repayments. 2.2.4 Commitment Fee: | Negotiable, subject to a maximum of 1% of the Undisbursed amount (one-off charge) | |
| A fee charged by a financial institution for an undisbursed facility in order to keep the line of credit open 2.2.5 Advisory/Consultancy fee | Negotiable. But only applies where there is a written advisory/consultancy agreement between the bank and the customer | |
| 2.2.6 Credit Reference Reports | Cost recovery | |
| NOTE: Applicable for only customerinduced credit reference reports. | | |
| 2.3 | Charges for Consortium Lending 2.3.1 Agency Fee | Negotiable |
| 2.3.2 Management Fee | Negotiable | |
| 2.3.3 Commitment/Non-Drawing Fee | Negotiable subject to a maximum of 1% of the undisbursed amount | |
| 2.3.4 Renewal Fee | Negotiable, subject to a maximum of 0.5% of the principal | |
| 2.12.5 Commission charges for | Negotiable | |
| underwriting services 2.12.6 Participation Fee to be shared by | Negotiable | |
| PMBs | | |
| DESCRIPTION | RATE | |
|---|
| 3.1 | Current Account Maintenance fee: | Negotiable subject to a maximum of N1 per mille |
| 3.1.1 Current Account Maintenance Fee applies to customer-induced debit transactions on current accounts. The banks should not charge Current Account Maintenance fee on returned outward clearing cheques, reversal of transactions and all bank-induced debits 3.1.2 Loan repayment | No charge No charge | |
| 3.1.3 Debit representing transfer to another account of the same customer in the same bank Cost of Cheque Books: | | |
| 3.2 | Cheque Books | Full recovery of cost |
| 3.3 | Counter Cheque | N100 per leaflet |
Section 3: Current Account Maintenance Fee
SECTION 4: MISCELLANEOUS
| DESCRIPTION | RATE |
|---|
| 4.1 | Reactivation of accounts | No charge |
| 4.2 | Closure of Accounts | No charge |
| 4.3 | Insurance Premium paid on behalf of | Exact Premium (Customer to negotiate with the |
| customers | insurance company) |
| 4.4 | Issuance of statement of account: | No charge |
| 4.4.1 Mandatory monthly issuance of statement of account on current and savings accounts PMB and customer should agree on mode of transmission of statement (pick options from uniform account opening form) | Maximum of N50 per page |
| 4.4.2 Special request for statement of account (request in a manner other than agreed on mandatory issuance) | |
| 4.5 | Reimbursement for business visit | No charge N500 per request. |
| 4.6 | Status enquiry at the request of customer (e.g. Confirmation Letter, Embassy Letter, Reference Letter, Letter of Indebtedness/Non-indebtedness etc.) | |
| 4.7 | Verification of customers' documents with Government Agencies: | Cost recovery |
| 4.7.1 Search at Corporate Affairs Commission (CAC), land registry, Legal Search, etc. 4.7.2 Obtaining Certified True Copy | Cost recovery |
| (CTC) | 46 |
| Cost recovery | |
|---|
| 4.7.3 | Perfection of security for credit | |
| facilities, Deed of Assignment, Deed of Release e.t.c. | | |
| 4.8 | Issuance of withdrawal | Cost recovery |
| Booklet/Passbook | | |
| 4.9 | Customized deposit booklet | Negotiable No charge |
| 4.10 | Over-the-counter cash withdrawals below the limit set by the CBN cash withdrawal/lodgment policy | |
| 4.11 | Inter-branch cash | No charge |
| Deposits/withdrawals | | |
| 4.12 | Minimum amount for opening accounts | Subject to the CBN three-tiered KYC requirements |
| 4.13 | Mandatory alert - either SMS or email depending on customer's preference: 4.13.1 SMS alert | Not more than NCC rate (Fees on alerts are restricted to only customer induced transactions). All associated charges relating to a particular transaction should be consolidated into a single sms alert. |
| Fees on alerts are restricted to only customer induced transactions 4.13.2 Email notification | No charge | |
PART 2 (C): FINANCE COMPANIES
Section 1: Interest On Borrowings
| DESCRIPTION | RATE | |
|---|
| 1.1 | Borrowings | Negotiable |
| DESCRIPTION | | RATE |
|---|
| 2.1 | Interest Rate on Loans and Advances | Negotiable |
| 2.2 | Lending Fees 2.2.1 Facility Restructuring Fee | Negotiable, subject to a maximum of 0.50% on the |
| (Restructuring at the instance of customer) | | outstanding amount being restructured (one off charge). Negotiable subject to maximum of 1% of the principal amount granted (one off charge). |
| 2.2.2 Management fee: It covers processing and appraisal fee (one-off charge). Chargeable for all fresh requests granted. The charge also applies each time an additional amount is granted but only for the additional amount. No charges for requests declined. 2.2.3 Renewal Fee: | | Negotiable subject to maximum of 0.5% (one-off charge per renewal) |
| Chargeable for renewals granted. No charges for requests declined. 2.2.4 Penal/Default rate for Late Repayment of loans | | 1% flat on unpaid installment per month in addition to charging current rate of interest on outstanding debt (without prejudice to the provisions of the Revised Guidelines for PMBs in Nigeria) |
| NOTE: Seven (7) days shall be allowed within which there will be no penal charge on late repayments. 2.2.4 Commitment Fee: | | Negotiable, subject to a maximum of 1% of the Undisbursed amount (one-off charge) |
| A fee charged by a financial institution for an undisbursed facility in order to keep the line of credit open | | |
| 2.2.5 Advisory/Consultancy fee | Negotiable. But only applies where there is a written advisory/consultancy agreement between the bank and the customer | |
|---|
| 2.2.6 Credit Reference Reports | Cost recovery | |
| NOTE: Applicable for only customerinduced credit reference reports. | | |
| 2.3 | Charges for Consortium Lending 2.3.1 Agency Fee | Negotiable |
| 2.3.2 Management Fee | Negotiable | |
| 2.3.3 Commitment/Non-Drawing Fee | Negotiable subject to a maximum of 1% of the undisbursed amount | |
| 2.3.4 Renewal Fee | Negotiable, subject to a maximum of 0.5% of the principal | |
| 2.12.5 Commission charges for | Negotiable | |
| underwriting services 2.12.6 Participation Fee to be shared by | Negotiable | |
| Financial Companies | | |
Section 3: Miscellaneous
| DESCRIPTION | RATE | |
|---|
| 3.1 | Insurance Premium paid on behalf of | Exact Premium (Customer to negotiate with the |
| customers | insurance company) | |
| 3.2 | Business visit | No charge |
| 3.3 | Verification of customers' documents with Government Agencies: | Cost recovery |
| 3.3.1 Search at Corporate Affairs Commission (CAC), land registry, Legal Search, etc. 3.3.2 Obtaining Certified True Copy (CTC) | Cost recovery Cost recovery | |
| 3.3.3 | Perfection of security for credit | |
| facilities, Deed of Assignment, Deed of Release e.t.c. | | |
Part 3 - Glossary
| TERMS | DEFINITION | | | | | | | | | | | | | |
|---|
| Access fees | These | are | fees | charged | by | a | financial | institution | for | access | to | its | network | or |
| distribution/transmission system. | | | | | | | | | | | | | |
| Accepting bank/paying | Bank which accepts a Bill of Exchange by counter-signing or endorsing it and thus incurs the legal | | | | | | | | | | | | | |
| bank | obligation of paying the bills amount on its maturity date. The bank nominated in a letter of credit to accept or pay drawings under that letter of credit. It can be either the Issuing or the Advising/Confirming Bank. | | | | | | | | | | | | | |
| Advance | Payment | A guarantee that enables the buyer to recover an advance payment made under a contract or | | | | | | | | | | | | |
| Guarantee | order if the supplier fails to fulfill its contractual obligations. It is alsoan irrevocable commitment by a bank to make payment if a third party fails to supply specific goods or services. | | | | | | | | | | | | | |
| Advising | Act of conveying the terms and conditions of a letter of credit to the beneficiary. The Advising Bank is the issuing bank agent, usually located in the beneficiary country. Advising also involves authentication i.e. the Advising Bank should take reasonable care to check the apparent authenticity of the credit (UCP600 Art 9). | | | | | | | | | | | | | |
| Advising Bank | The bank, usually in the exporter's country, which advises the terms of the letter of credit to the exporter (this need not be the exporter's own bank). | | | | | | | | | | | | | |
| Advising Commission | In inward letters of credit (export), this charge arises when a local bank simply verifies the authenticity of the credit and delivers same. | | | | | | | | | | | | | |
| Advisory/Consultancy | Fees charged by financial institutions where there is an agreement for advisory services. | | | | | | | | | | | | | |
| fees Amendment | Alteration to the terms of a letter of credit; amendments must stem from the applicant, be issued and advised to the beneficiary; the beneficiary has the right to refuse an amendment. | | | | | | | | | | | | | |
| Annual Percentage Rate | It is a standardized method of quoting the effective interest rate (actual cost of credit) on loans and advances. It includes all fees and takes into account the continual reduction of the principal amount through amortization. | | | | | | | | | | | | | |
| Applicant | One who applies to his bank to issue a letter of credit; in the majority of credits issued the applicant is an importer of goods. | | | | | | | | | | | | | |
| TERMS | DEFINITION |
|---|
| Appraisal fees | This is the fee charged by a professional to estimate the market value of a property. This is usually charged as a fixed amount or a percentage of the estimated value. |
| Assignment of Proceeds | The assignment (transfer) by the exporter to their right to part or all of the proceeds of a letter of credit to a third party (usually the supplier of the goods). |
| Back-to-Back Letter of | Back to Back letter of credit is an irrevocable LC which serves as collateral for another LC. The |
| Credit (LC) | advising bank of the first LC becomes the issuing bank of the second LC. It is also called counter credit or reciprocal LC. |
| Bank Guarantee | A type of guarantee in which a bank promises to repay the liabilities of a debtor in the event that the debtor is unable to pay. The guarantee is usually on the bank's letter-headed paper and is signed/sealed in line with the agreed terms. |
| Bankers Acceptance | A BA is a draft drawn on and accepted by a bank, unconditionally ordering payment of a certain sum of money at a specified time in the future to the order of a designated party. Since the instrument is negotiable, title to it is transferred by endorsement. It is a marketable instrument and allows a bank to finance its customers without necessarily utilizing its loanable funds. Instead, funds are provided by investors who are willing to purchase these obligations on a discounted basis. |
| Beneficiary | A payee or recipient, usually of money. A party in whose favour a letter of credit is established, usually the exporter. |
| Bid/Tender Bond or Bid | A bond/document purchased by a company or individual (bidding on a large project or sale) in |
| Security | order to demonstrate that the company has sufficient funds to complete the transaction for the price quoted in the bid, should the company be selected to execute that transaction. The bond/document guarantees that the bidder will not be prevented from fulfilling the contract by availability of funding. |
| Bills for Acceptance | This is a bill drawn between the drawer and the drawee which confers liability on the drawee before a transactioncan take place. |
| Bills for Collection | A Bill for collection provides the trading parties, i.e. buyer and seller, with a compromise between open account and advance payment terms for the settlement of import transactions. |
| Bills Payment | A process used by financial institutions to collect payments for utilities (such as water bills, cable subscription payments, etc.), usually via e-banking channels. |
| Card Issuance fees | Fees charged by banks for the issuance of e-cards such as ATM cards, MasterCard, etc.54 |
| TERMS | DEFINITION | | |
|---|
| Cheque | A negotiable instrument drawn against deposited funds, to pay a specific amount of money to a specific person upon demand. Examples include bills of exchange and drafts. | | |
| Cheque Indemnities | This the assurance issued by the drawee to a third party, stating that the drawee will honour a cheque issued by a drawer in the event of the inability of the drawer to effect the payment of the cheque. | | |
| Clean Bill | A bill of lading issued by a carrier declaring that the goods have been received in an appropriate condition, without the presence of defects. The product carrier will issue a clean bill after thoroughly inspecting the packages for any damage, missing quantities or deviations in quality. | | |
| Collection | Charge | on | The fee which a financial institution charges for the collection of money from the account of the |
| Cheques | drawer. | | |
| Collecting Bank | The bank to which a person has deposited a cheque. Such a bank has the duty to collect the money from the account of the writer of the cheque. | | |
| Commercial Papers | A Commercial Paper is an unconditional promise by a person to pay to the order of another person a certain sum at a future date. Such an instrument may or may not carry the bank's guarantee. | | |
| Commitment Fees | Afee charged by a financial institution for an undisbursed facility in ordertokeep the line of credit open. | | |
| Commission | on | Afee chargedbyafinancial institutionforfacilitatingawithdrawalbyits customer. | |
| Transaction Confirming/Confirmation | Act of a bank other than the Issuing bank assuming the liability for honouring a letter of credit following receipt of a complying presentation. Confirmation is normally added at the request of the Issuing Bank. | | |
| Confirming Bank | The bank which adds its 'confirmation' (or irrevocable undertaking to pay) to that of the Issuing Bank. If no confirmation is added the letter of credit is unconfirmed. | | |
| Contingent Liability | A liability that arises only under specified conditions, e.g. When a bank opens a letter of credit it incurs an obligation to make a future payment on condition that the terms are fully met. | | |
| Counter Cheque | This is a bank printed cheque provided to customers whose cheques are not available at the point of withdrawal from the current/checking account. | | |
| Credit Bureau | This is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. | | |
| TERMS | DEFINITION | |
|---|
| Credit Reference Report | A report containing detailed information on a | person's credit history including identifying |
| information, credit accounts and loans,bankruptcies and late payments, as well as recent inquiries. It can be obtained by prospective lenders with the borrower'spermission to determine his/her credit worthiness. | |
| Daily Balance | The closing balance in a savings or deposit account in any given day. | |
| Default Rate | This is the interest rate that financial institutions charge for failure of their customers to make payments on loan obligations as at when due, including late payments to their credit lines. | |
| Discountable | This are investable instruments such as Treasury bills and other Federal Government short term | |
| Instruments | debt instruments in which interest is earned upfront. Liquidity is guaranteed by the CBN for this instruments and is redeemable at any point in time through any authorized dealer (Banks and discount houses) | |
| Discrepancy | Any deviation from the terms and conditions of a letter of credit, or the documents presented there under, or any inconsistency between the documents themselves. | |
| Documentary Bill | Often used in international trading to mean a bill of exchange or commercial draft that is presented for payment usually along with other required documents such as certificate of insurance and certificate of origin. | |
| Endorsement | The legal transfer of title of a document by signature, usually, but not necessarily, on the reverse. | |
| Equipment Leasing | This refers to an arrangement that allows one party to purchase an equipment and then lease it to another party for an agreed upon cost. Usually the ownership of the equipment remains with the purchaser with an option to be transferred to the lessor upon the expiration of the lease period and upon the possible exercise of a buyout clause. | |
| Establishment | Is a commission charged when a bank initiate an outward letter of credit under import. | |
| Commission Expiry Date | Last date on which the beneficiary can fulfill the terms of an agreement, failing which the agreement becomes invalid. | |
| Facility Restructuring fee | Fee charged where there is an agreement to change the terms and conditions of existing facility. This will usually apply when there is an extension, enhancement or need to renegotiate a facility. | |
| Foreign Cheque | This is a service in which value is given on a foreign cheque deposited into an account before the | |
| Purchase | cheque clearing processes are completed. | |
| TERMS | DEFINITION |
|---|
| Form M | This is an application form to import goods into Nigeria, the form is processed through any authorized dealer bank irrespective of the value of the goods and whether payment is involved or not. |
| FPRD | Financial Policy and Regulation Department –A department in the CBN. |
| Handling Commission | Banking commission charged in processing both outward and inward letters of credit. |
| Honour | The discharge by a bank of its obligations under a letter of credit following its receipt of documents that comply with the terms of the letter of credit, UCP600 and standard international banking practice. This is done by paying at sight if the credit is available by sight payment, incurring a deferred payment undertaking and paying at maturity if the credit is available by deferred payment or accepting a bill of exchange drawn by the beneficiary and paying at maturity if the credit is available by acceptance. |
| Issuing Bank | The bank that opens a letter of credit at the request of its customer, the applicant. |
| Indemnities | An undertaking given to compensate for (or to provide protection against) injury, loss, incurred penalty or from a contingent liability. |
| Insurance Debt | Payment of insurance premium on behalf of the bank customer to the insurance company. |
| Inward telegraphic | This is the receipt of funds by SWIFT/Telex from an overseas party. It allows the receipt of funds in |
| transfer | various currencies all over the world. |
| Letters of credit | A written commitment to pay, by a buyers or importers bank (called the issuing bank) to the sellers or exporters bank (called the accepting bank, negotiating bank or paying bank). LCs guarantees a payment of a specified sum in a specified currency provided the seller meets precisely defined conditions and submits the prescribed documents within a fixed time frame. |
| Maintenance Fee | Banking fee on electronic cards charged annually in line with agreement where applicable. |
| MPR (Monetary Policy | This is the baseline interest rate set by the CBN to control the amount of money in circulation at |
| Rate) | any given time. A higher MPR shrinks money supply while a lower MPR expands money supply. |
| NEFT (NIBSS Electronic | This is an electronic payment system that enables the execution of transfer instruction between |
| Funds Transfer) | banks on the NIBSS platform. |
| TERMS | DEFINITION |
|---|
| Negotiation | Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which the reimbursement is due to the nominated bank. Mere examination of the documents without giving value does not constitute a negotiation. |
| Negotiable | A negotiable loan/contract is one whose terms can be decided by agreement between the parties |
| Loan/contract | to the loan/contract. |
| Negotiation of | Refers to a situation where LC documents are scrutinized as per international standard of scrutiny |
| Documents | and discrepancies are found with the LC terms. The negotiating bank may opt to give value by paying or incurring a deferred payment obligation as per the LC provided the beneficiary undertakes to indemnify the negotiating bank in the event of rejection of the LC by the opening bank. |
| NIBSS (Nigeria Inter-bank | This is an institution that provides the infrastructure for automated processing, settlement of |
| Settlement System) | payments and fund transfer instruction between banks, discount houses and card companies in Nigeria. It is owned by deposit money banks and the CBN. Discount houses also have shares. |
| OD (Overdraft) | Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against which a current (checking) account customer can write cheques or make withdrawals. |
| Past Due | Bill or loan that has not been paid on the maturity date/due date. |
| Payroll Solution | This is a computerized payroll software that performs payroll processing duties such as salary payments, wage deductions, tax calculations etc. |
| Per Mille | This means a tenth of a percent or one part of a thousand. It is computed as 1/1000 or 0.001%. |
| Performance Bond | A written guarantee from a third party guarantor (usually a bank) submitted to a principal (client or customer) by a contractor to ensure the payment of a sum of money (usually covering 100% of the contract sum) in case the contractor fails in the full performance of the contact. |
| Presentation | Act of requesting the importer's payment/ acceptance of an import bill or, in UCP600 terminology, either delivery to the Issuing Bank, Confirming Bank or other Nominated Bank of documents for honour under a letter of credit, or the documents so delivered. |
| Prevailing Interest Rate | A term used by financial institutions to describe the average interest rate being charged by lending institutions. |
58
| TERMS | DEFINITION |
|---|
| Processing Fees | Money paid to lenders by borrows for collecting needed information to setup credit facilities. |
| Promissory Notes | Is a written, signed unconditional promise by one party (the issuer) to pay a determinate sum of money to the other (the payee) either at a fixed or determinate future time or on demand by the payee under specific terms. |
| Revalidation | Official approval or confirmation of a document after a change has been effected on the same document. |
| Revolving Credit | A credit automatically reinstated after each drawing or upon receipt of authorization from the letter of credit issuing bank, with limits as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing. |
| Sight | A bill payable at sight is payable on presentation to the drawee, i.e. on demand. |
| Standby Credit | This may be established as security for facilities granted at another branch or bank, usually to a subsidiary of the standby letter of credit applicant. |
| Usance Bill | A Bill of Exchange which allows the drawee a term or period of credit (this period is also called usance). The term is usually stated in days (e.g. 30 days) or months and starts either from the date of the bill (e.g. 30 days date) or from the date of bill of lading, or from sight by the drawee (e.g. 30 days sight) which in practice means from the date of acceptance. |
| Unauthorized OD | If an account becomes overdrawn without the bank's prior permission (that is: go into an unauthorized overdraft or exceed your authorized overdraft limit) the bank will impose penalty charges. e.g late repayment of Loan facility. |
Part 4 - Minimum Disclosure Requirements In Offer Letters For Credit Facilities /Loans
| GENERAL REQUIREMENTS | | |
|---|
| S/N 1 | Name of borrower | This includes the name of the borrower. |
| 2 | Contact details of the borrower | This should clearly state the address (location), telephone number, email, etc. of the borrower. |
| 3 | Credit type | This states the type of facility approved for the borrower. |
| 4 | Purpose of the credit | This states the reason for which the facility is granted. |
| 5 | Amount | This is the amount approved for the facility. |
| 6 | Collateral | The bank should disclose the asset pledged by the borrower as security for the facility (e.g. shares, landed property, cash, etc.). |
| 7 | Loan tenor | This spells out the approved duration for the facility. |
| 8 | Interest rate | This is the annual interest rate to be charged by the bank on the amount outstanding (except for overdrafts). |
| 8 | Variable rate information | This should clearly state the possibility of changes in rates in line with money market conditions. It should include notification and time lines for concurrence by customers to the changes. The new rates (both increase and decrease) can only apply 48 hours after the notification. The variable rate information should also outline the bank's responsibilities in the event of such movements in rates. |
| 9 | Fees and commissions | The fees and commissions are as contained in the Guide. These should be stated in percentage and Naira terms. |
| 10 | Repayment terms | This should state the frequency (i.e. monthly, quarterly, bullet etc.) of repayment of principal and interest on outstanding balance. It should |
| | also state the date on which the repayments fall due. | | |
|---|
| 11 | Repayment schedule | The bank should provide in details, the periodic amounts to be repaid by the borrower within the tenor of the facility. | | |
| 12 | Early Liquidation Terms | This includes all information the borrower needs to know, including rights/obligations, or penalties, in the event of liquidation of the facility, before the expiry date, in line with Guide. | | |
| 13 | Late repayment | This should detail all penalties that will be borne by the borrower in the event of default, in line with the Guide. | | |
| 14 | Grace period | a. | Seven (7) days shall be allowed within which there will be no penal charge on late repayments. | |
| | b. | Seven (7) days from the date of execution, shall be allowed within which loan contracts can be rescinded. | |
| 15 | Insurance requirements (where | The bank is expected to disclose the nature of insurance policy | | |
| applicable) | required for the facility. | | |
| 16 | Conditions | precedent | to | This details all requirements which must be fulfilled by the borrower |
| drawdown | before drawdown on the facility. Such information includes the submission of Insurance documents, perfection of collateral documentation, acceptance of loan offer letter, etc. | | |
1. Consumer Loans
This encompasses the various types of loans given to individuals either to finance the acquisition of an asset or to execute personal projects. Some of these loans are unsecured and are based on the borrower's ability to repay.
| S/N | DISCLOSURE REQUIREMENT | |
|---|
| 1 | Name and address of creditor | This includes the name, address and day-time contact details of the |
(a) Unsecured personal loans; (b) Secured personal loans; (c) Computer loans; (d) Auto loans; (e) Other forms of bridging finance availed to borrowers.
| borrower. | |
|---|
| 2 | Item financed | This states the consumer good(s) to which the bank is financing. |
| 3 | Itemization of amount financed | This gives a breakdown of the item(s) being financed. |
| 4 | Annual percentage rate (APR) | This is the interest rate which will be charged by the bank on the amount disbursed. |
| 5 | Variable rate information | This should clearly state the possibility of increase in rates in line with money market conditions. It should also outline the bank's responsibilities in the event of a movement in rates, including the means and timing of its notification to the customer. |
| 6 | Payment schedule | The bank should also disclose with details, all necessary repayment information including the monthly, quarterly or other repayment sums as was agreed with the borrower. |
| 7 | Prepayment Terms | This includes all information the borrower needs to know during the consummation of the facility, such as the customer's rights (and penalties) in the event of his decision to pay off the facility before its expiration, etc. |
| 8 | Late payment policy | This should detail all penalties that will be suffered by the borrower in the event of default. |
| 9 | Collateral | The bank will be required to disclose the property, goods, shares and/or other assets pledged by the borrower as security for the facility. |
| 10 | Insurance requirements (where | The bank is expected to disclose the nature of insurance policy |
| applicable) | required for the facility. |
| 11 | Repayment terms | This includes all information the borrower needs to know before the consummation of the facility, which includes information such as the bank's right to call in the facility (in the event of certain occurrences), etc. |
| 12 | Loan tenor | This spells out the approved duration for the facility. |
| 13 | Conditions precedent to | This details all requirements which must be fulfilled by the borrower |
| drawdown | before drawdown on the facility. Such information includes the submission of Insurance documents, perfection of collateral documentation, etc.62 |
2. Mortgage Loans
| S/N | DISCLOSURE REQUIREMENT | |
|---|
| 1 | Name and address of creditor | This includes the name, address and day-time contact details of the borrower. |
| 2 | Description property financed | This should describe location and other features of property being financed by the bank. |
| 3 | Itemization of amount financed | This gives a breakdown of the item(s) being financed. |
| 4 | Annual percentage rate (APR) | This is the interest rate which will be charged by the bank on the amount disbursed. |
| 5 | Variable rate information | This should clearly state the possibility of increase in rates in line with money market conditions. It should also outline the bank's responsibilities in the event of a movement in rates, including the means and timing of its notification to the customer. |
| 6 | Payment schedule | The bank should also disclose with details, all necessary repayment information including the monthly, quarterly or other repayment sums as was agreed with the borrower. |
| 7 | Prepayment Terms | This includes all information the borrower needs to know during the consummation of the facility, such as the customer's rights (and penalties) in the event of his decision to pay off the facility before its expiration, etc. |
| 8 | Late payment policy | This should detail all penalties that will be suffered by the borrower in the event of default. |
| 9 | Collateral | Usually, the security for the loan is the property being financed. |
| 10 | Insurance requirements (where | The bank is expected to disclose the nature of insurance policy |
| applicable) | required for the facility. |
| 11 | Repayment terms | This spells out the approved duration for the facility. |
| 12 | Loan tenure | This details all requirements which must be fulfilled by the borrower before drawdown on the facility. Such information includes the submission of Insurance documents, perfection of collateral documentation, etc.64 |
3. Overdrafts
| S/N | DISCLOSURE REQUIREMENT | |
|---|
| 1 | Name and address of creditor | This includes the name, address and day-time contact details of the borrower. |
| 2 | Reason for the loan | This should describe the customer's needs which the overdraft is aimed to finance. |
| 3 | Overdraft limits | The limits on the OD line should be clearly stated. |
| 4 | Annual percentage rate (APR) | This is the interest rate which will be charged by the bank on the amount disbursed. |
| 5 | Variable rate information | This should clearly state the possibility of increase in rates in line with money market conditions. It should also outline the bank's responsibilities in the event of a movement in rates, including the means and timing of its notification to the customer. |
| 6 | Late payment policy | This should detail all penalties that will be suffered by the borrower in the event of default. |
| 7 | Collateral | Usually, the security for the loan should be clearly stated. |
| 8 | Insurance requirements (where | The bank is expected to disclose the nature of insurance policy |
| applicable) | required for the facility. | |
| 9 | Repayment terms | This spells out the approved duration for the facility. |
| 10 | Loan tenure | This details all requirements which must be fulfilled by the borrower before drawdown on the facility. Such information includes the submission of Insurance documents, perfection of collateral documentation, etc. |
Minimum Disclosure Requirements For Contingent Liabilities
| PRODUCTS | DISCLOSURE REQUIREMENTS |
|---|
| Bid Bond | - Bank should issue offer letter stating all terms and conditions; - Where customer provides cash - Place in an investment account at an agreed rate; - Where bank provides funds - Parties should agree on a rate; - Transaction dynamics |
| Performance Bond | - Issue offer letter stating all terms and conditions, based on risk assessment |
| Advance Payment Guarantee | - Issue offer letter stating all terms and conditions, specifically utilization of proceeds to be received; - Appointment of quantity surveyor/expert |
| Bank Guarantee | - Issue offer letter stating all terms and conditions, most importantly when risk crystallizes; - Move to investment account, where customer provides funds. |
| Indemnities | - Issue offer letter stating all terms and conditions and specify when risk crystallizes. |
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