CENTRAL BANK OF NIGERIA Financial Policy & Regulation Department Central Business District P.M.B. 0187 Garki, Abuja.

Tel: .. 09-462 37404 E-mail: fprd@cbn.gov.ng March 27, 2013

Ref: Fpr/Dir/Gen/Cir/03/002

CIRCULAR TO ALL BANKS AND DISCOUNT HOUSES: THE REVISED GUIDE TO BANK CHARGES The Guide to Bank Charges, first issued in 2004, was meant to provide a standard for the application of charges in the banking industry, and to minimize conflicts between banks and their customers. Over time, it was observed that the various charges in the Guide had become out of tune with current realities in the market, and some provisions/terms in it allowed room for ambiguity and conflict.

In order to reflect current developments in the market and provide clarity on banking terms, the CBN recently conducted a review of the "Guide" in consultation with all the banks and discount houses, Bankers' Committee, financial experts/consultants and also considered inputs received from other stakeholders to produce the Revised Guide to Bank Charges.' To reduce ambiguity in loan transactions, minimum disclosure requirements for loan contracts have been stipulated, in addition to the glossary of terms provided.

The Revised Guide to Bank Charges is hereby issued, to serve, as a regulation on applicable charges for banking services and products offered to customers. It replaces the Guide to Bank Charges issued in 2004.

Banks and discount houses are enjoined to ensure compliance with the provisions of the Guide.

The Revised Guide to Bank Charges takes effect from April 1, 2013.

Ag. DIRE FINANCIAL POLICY AND REGULATION DEPARTMENT

Revised Guide To Bank Charges

April 1, 2013 The "Guide to Bank Charges" provides a standard for the application of charges on the various types of products and services Deposit Money Banks (DMBs) 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 are required to appropriately draw the attention of their customers to its consequence and the two parties should mutually agree on the applicable 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, it is not exhaustive. Banks 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 terminologies used in the Guide.

This Revised Guide to Bank Charges takes effect from April 1, 2013, and replaces the existing one issued in 2004 and may be reviewed from time to time to reflect changes in the business environment.

Contents		Pages
SECTION 1:		INTEREST ON DEPOSITS
SECTION 2:		INTEREST RATES/ LENDING FEES.
SECTION 3:		COMMISSION ON TURNOVER
SECTION 4:		COMMISSION ON BONDS GUARANTEES & INDEMNITIES, ETC
SECTION 5:		FOREIGN EXCHANGE COMMISSION .
SECTION 6:		BILLS FOR COLLECTION
SECTION 7:		STRAIGHT FORWARD HANDLING OF DOCUMENTS
SECTION 8:		INWARD AND OUTWARD LETTERS OF CREDIT.
SECTION 9:		INTERNAL TRANSACTIONS (within Nigeria).
SECTION 10:		ELECTRONIC BANKING
SECTION 11:		MISCELLANEOUS .
GLOSSARY
MINIMUM DISCLOSURE REQUIREMENTS IN OFFER LETTERS FOR CREDIT FACILITIES /LOANS
	1.	CONSUMER LOANS.
	2.	MORTGAGE LOANS
	3.	OVERDRAFTS
MINIMUM DISCLOSURE REQUIREMENTS FOR CONTINGENT LIABILITIES

SECTION 1:

Interest On Deposits

	DESCRIPTION	RATE
1.1	Current account in credit balance	Negotiable
1.2	Savings deposits accounts	Minimum of 30% of MPR p.a.
1.3	Term Deposit Accounts	Negotiable
Domiciliary Accounts:
1.4	1.4.1	Current Accounts	Negotiable
1.4.2	Savings Accounts	Negotiable
	Deposits held as collateral
1.4.3	Negotiable (in line with Term Deposit rate)

SECTION 2:

Interest Rates/ Lending Fees

DESCRIPTION	RATE
Interest Rates
2.1	Lending Rate :
2.1.1 Local Currency Loans	Negotiable (the rate should reflect 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 Lending Rate - Foreign currency	Negotiable (reference to LIBOR)
Loans
2.2	Interest (on authorized excess OD)	Negotiable (the rate should reflect the risk-
	based pricing model). The customer must be
	notified within 5 business days in advance of
	the application of the new rate.
2.3	Unauthorized OD/Credit	Not permissible. The bank should sanction the
	officer and forward the name to the Director
	of FPRD, CBN
Drawing against Uncleared Effects	Negotiable
2.4
2.5	Equipment Leasing	Negotiable
2.6	Discountable instruments e.g. Usance	Negotiable
bill, Bankers' Acceptance, Commercial
Papers, Promissory Notes etc.

1 Seven (7) days from the date of execution, shall be allowed within which loan contracts can be rescinded.

	RATE
Lending Fees	Cost recovery
2.7	Credit Reference Reports
NOTE: Applicable for only customer-
induced credit reference reports.	Negotiable, subject to a maximum of 0.50%
2.8	Facility Restructuring Fee	on the outstanding amount being restructured
	(one off charge).
2.9	Management fee2: It covers processing	Negotiable subject to maximum of 1% of the
	principal amount granted (one off charge).
and appraisal fee (one-off charge).
Renewal Fee3:
2.10	Negotiable subject to maximum of 0.25% flat
2.10.1 Corporate Bodies	Negotiable subject to maximum of 0.25% flat
2.10.2 Individuals
2.11	Processing Fee for consent for share	Negotiable, subject to a maximum of 0.25% of
security	amount of facility (one-off charge)
Penal rate for Late Repayment of	1% flat on unpaid installment per month in
2.12	Loans/Advances (Default or Penalty	addition to charging current rate of interest on
	outstanding debt (without prejudice to the
Rate)	provisions of the Prudential Guidelines on the
	limitation of accruals)
NOTE: Seven (7) days shall be allowed
within which there will be no penal charge
on late repayments.
2.13	Commitment Fee	Negotiable, subject to a maximum of 1% of
	the amount (one-off charge)
2.14	Advisory/Consultancy fee	Negotiable
Warehousing Facility	To be agreed amongst all the parties
2.15

2 NOTE ON MANAGEMENT AND RENEWAL FEES: Chargeable for all requests granted whether fresh or renewed. The charge also applies each time an additional amount is granted but only for the additional amount. No charges for requests declined. 3 See Note 2 above

Inter-bank Borrowing Rates
2.16	Overnight /Call Money	Negotiable
2.17	Tenured	Negotiable
2.18	Charges for Consortium Lending
2.18.1 Agency Fee	Negotiable
2.18.2 Management Fee	Negotiable
2.18.3 Commitment/Non-Drawing Fee	Negotiable subject to a maximum of 1% of the
	amount
2.18.4 Appraisal/ Renewal Fee	Negotiable, subject to a maximum of 0.25% of
	the principal
2.18.5 Commission charges for	Negotiable
underwriting services
2.18.6 Participation Fee to be shared by	Negotiable
Banks
2.18.7 Non-Drawing Fees (for consortium	No charge
lending)

SECTION 3:

Commission On Turnover

DESCRIPTION	RATE
3.1	Commission on Turnover:
3.1.1 COT applies to customer-induced	Negotiable subject to a maximum of N3 per
debit transactions on current accounts.	mille in 2013; N2 per mille in 2014; N1 per
The banks should not charge COT on	mille in 2015; and COT-free (i.e. zero) from
returned outward clearing cheques,	2016
reversal of transactions and all bank-
induced debits
NOTE:
.	Gradual phase-out of COT from
N3 (2013) to N2 (2014) to N1
(2015), and NO (2016)	COT free
3.1.2 Loan repayment from current or
savings account
3.1.3 Debits representing transfer to other	No charge
accounts in the same name, in the same
branch or at another branch of the same
bank
Cost of Cheque Books
Cheque Books	Full recovery of cost plus stamp duties
3.2
3.3	Counter Cheque	N200 per leaflet

SECTION 4: INDEMNITIES, ETC.

Commission On Bonds Guarantees &

	DESCRIPTION	RATE
4.1	Bid/Tender Bond (Bid Security)	Negotiable subject to a maximum of 1% of the
	Bond value (one-off charge)
4.2	Performance bond (chargeable from	Negotiable subject to a maximum of 2% of the
	date of contingent liability)	Performance Bond value per half year
4.3	Advance Payment Guarantee (APG)	Negotiable subject to a maximum of 1% of the
	APG value (one-off charge)
4.4	Third-party Cheque Indemnities	To be discouraged - However, negotiable for
	non-clearing financial institutions e.g Micro-
	finance banks
4.5	Bank Guarantees	Negotiable subject to a maximum of 2% (one-
	off charge)
4.6	Other Bonds, Guarantees and	Negotiable subject to a maximum of 2%,
	Indemnities	minimum of N5,000 (one-off)

SECTION 5:

Foreign Exchange Commission

DESCRIPTION	RATE
Purchases:
5.1	Purchases from CBN	1% of the value involved - flat (or as may be
	reviewed from time to time by the CBN)
5.2	Inter-bank purchases	Negotiable subject to a maximum spread of
	50k per dollar
5.3	Inward Telegraphic/SWIFT and other	No charge
transfers expressed in foreign currency
5.4	Travellers Cheques, Cheques and Sight
Bills for negotiation:
5.4.1 Travelers' Cheques	As advised by CBN
(TCs for pilgrimage are specially arranged
for by the CBN)
5.4.2 Cheques	Minimum of N1,000 subject to a maximum of
	1%
5.4.3 Sight Bills	Minimum of $1,000 subject to a maximum of
	1%
5.4.4 Usance Bills	Minimum of N1,000 subject to a maximum of
	1%
5.5	Foreign Currency notes: Purchases	At the banks spot rate
from customers

Sales:
5.6	Commission on Outward	SWIFT cost recovery only
Telegraphic/SWIFT and other transfers
5.7	Foreign currency notes (sales to	Bank's spot rate
customers)	Minimum of N3,000 subject to a maximum of
5.8	Transfers for non-account holders
(subject to enhanced due diligence)	1.5% of transaction value (subject to enhanced
	due diligence)
5.9	Commission on cash
withdrawals/Withdrawals from
deposits other than cash:
5.9.1 Current account	Negotiable, subject to a maximum of 0.5% of
	transaction value
5.9.2 Savings account	No charge
5.10	Charges for foreign cash currency	No charge
lodgment
5.11	Foreign cheque purchase	1% of the value of the cheque + the standard
	charge for clearing cheques (Offshore charges
	+ courier)
5.12	Collection Charge on Cheques	1% of cheque value or US$10 (or its
	equivalent) whichever is higher
Commission on Telegraphic/SWIFT	0.5% or US$10 or its equivalent, whichever is
5.13	Transfer and Drafts	higher

SECTION 6: BILLS FOR COLLECTION

DESCRIPTION	RATE
Bills for collection (Inward)
6.1	Collection:
6.1.1 Commission on Clean Bill	Negotiable subject to a maximum of 2%
6.1.2 Commission on Documentary Bill	Negotiable subject to a maximum of 2%
6.1.3 Postage (where applicable)	Actual cost of postage
6.1.4 Communication charge (where	Actual cost of communication
applicable)
6.2	Holding charges after non-payment or
non-acceptance, chargeable one month
after arrival of goods:
6.2.1 N25,000 bills and below	N2,500 per month
6.2.2 Above 425,000	N5,000 per month
6.3	Extension charges for accepted or sight	N3,000 per bill
bills altered to tenure bills	0.5% of the value of the bills
6.4	Bills for Collection - Negotiation
୧' ୧	Protest charges plus Notary Public Fees	Negotiable, subject to a maximum of N5,000
6.6	Commission on handling charges in
respect of collection:	25%
6.6.1 Presenting Bank
6.6.2 Collecting Bank	75%
	In addition to the holding charge in (6.2)
6.7	Unpaid Bills	above, where a Nigerian bank is acting for
	Nigerian presenting bank, 1% commission is
	claimed and proceeds split with collecting
	bank in accordance with (6.6) above

Bills for Collection (Outward)
Collection commission
6.8	6.8.1 Documentary Bills	Negotiable subject to a maximum of 2%
6.8.2 Clean Bills	Negotiable subject to a maximum of 1%

SECTION 7:

Straight Forward Handling Of Documents

	DESCRIPTION	RATE
7.1	Export Documents Delivery	N5 per mille of the invoice value subject to a
	maximum of N5,000
7.2	Import Documents:
7.2.1 Delivery	Negotiable subject to a maximum of N5,000
	plus cost of courier
7.2.2 Bills for acceptance and return to	Negotiable subject to a maximum of N5,000
Principals	plus cost of courier
7.2.3 Bills for Collection due for payment	Cost of courier

SECTION 8:

Inward And Outward Letters Of Credit

DESCRIPTION	RATE
Inward Letters of Credit (Export)
8.1	Processing and Registration of Nigerian	N5,000 flat
Export (NXP) Form
8.2	Advising Commission:
8.2.1 Where a Nigerian bank simply	N2,000 flat
verifies authenticity of the Credit and
delivers same.
8.2.2 Where a Nigerian bank has to	N0.5 per mille, subject to a minimum of $25
rewrite the Credit	or its equivalent.
8.3	Confirming Commission	Minimum of N5,000 subject to a maximum of
	1% of the face value.
8.4	Transferable Credits, Transferable and
Divisible Credits (part-shipment):
8.4.1 Where all or part of a Credit is	0.5% of face value subject to a minimum of
transferred, the charges (paid by the	US$25 or its equivalent
original beneficiary) are of the amount
transferred
8.4.2 Negotiation of Documents	1%
Commission plus interest, if applicable, at
local rate (to be clarified)
Outward Letters of Credit (Import)
8.5	Purchase of Forms A	N100 per form
Form M:
8.6	8.6.1 Processing	Negotiable subject to a maximum of N5,000
8.6.2 Amendment	Negotiable subject to a maximum of N5,000
8.6.3 Revalidation/ Extensions	Negotiable subject to a maximum of N5,000

8.7	Establishment Commission
8.7.1 For credits up to 180 days	1% of face value
8.7.2 For credits up to 270 days	1.25% of face value
8.7.3 For credits up to 360 days (these	1.5% of face value
charges are on the period of validity of the
credit)
8.8	Renewal, extension and Increase in the
LC value:
8.8.1 Renewals4	Commission on Applicable LC establishment
8.8.2 Extensions	N5,000.00 flat
NOTE: Where a letter of credit is
extended for a period in excess of 12
months from the date of establishment, a
Re-establishment Commission of 1% is
payable	N2,000 flat
8.9	Increases or Enhancements:
Additional establishment commission
should be charged on the amount of any
increase for the unexpired period of
validity of credit
Other Amendments	2,000 flat
8.10
8.11	Usance Bill under Credit Guarantee
Commissions:
8.11.1 Where the bill is less than one year	N3 per mille per month
8.11.2 Where the bill exceeds one year	N5 per mille per month
8.12	Risk Assessment Report (RAR)	Without valid for FX Form M - N 2,500.00;
	With Valid FX Form M -No charge

4 Credits may be renewed not later than the 15th day following expiry only on payment of full Establishment Commission.

SECTION 9:

Internal Transactions (Within Nigeria)

DESCRIPTION	RATE
9.1	Bank Drafts/Cheques
9.1.1 Customer	Current Account: - 4300; and
	Savings Account: - N500
9.1.2 Non-Customer	N500.00 + COT
9.2	Draft Repurchase	No charge
9.3	Transfers within Nigeria:
9.3.1 Intra-bank Transfers	No charge
9.3.2 Inter-bank Transfers	RTGS Cost
9.3.3 Transfers to non-account holders	0.1% of the transactions amount subject to a
	minimum of N200.
9.4	Transactions paid for in cash by non-	0.3% of the value of the transaction. However,
account holders (e.g. drafts, local	banks are enjoined to undertake KYC on such
money transfer, cash card loading etc.)	customers
9.5	Cash handling charge	Extant CBN policy on the subject applies
9.6	9.6.1 Normal period for clearing of	Clearing House rules applies
cheques: As advised by the Clearing
House	Negotiable
9.6.2 Special clearing of cheques
9.7	Standing Order Charge	N300.00 plus external transfer cost (e.g
	NIBSS/NACS charges)
9.8	Direct Debit/Credit	CBN extant policy prevails
9.9	Safe Custody	Negotiable
Stopped cheques	4500.00 per order
9.10
9.11	Purchase of Treasury Bills for	0.125% on the yield
customers

SECTION 10: ELECTRONIC BANKING

		DESCRIPTION	RATE
10.1	Internet Banking:
	10.1.1 Token	Maximum of N1,500 (one-off charge)
	10.1.2 Bills Payment	N100
	10.1.3 Interbank Transfer	NI00
10.2	Electronic Funds Transfer:
	10.2.1 Below N500,000	N70
	10.2.2 4500,000 to 410,000,000	N100
	10.2.3 Above N10,000,000	71500
	10.2.4 RTGS	2700
10.3	Annual maintenance Fee on foreign	N3,000
	currency denominated cards
10.4	Credit Card Charges:
	10.4.1 Interest charges	2.50%
	10.4.2 International withdrawals (per	N240
	transaction)
	10.4.3 Late repayment	N2,000
10.5	Debit Card Charges:
	10.5.1 Issuing Fee	N1,000 (one-off charge)
	10.5.2 ATM Bill Payment	A 100
	10.5.3 International withdrawals (per	N240
	transaction)
	10.5.4 Debit card maintenance charges	N100 (annual charge)
	10.5.5 Cash card loading/unloading	No charge
		18

10.6	ATM Transactions:
10.6.1 Within the bank	No charge
10.6.2 On other banks ATMS	No charge
10.6.3 On approved Independent ATMs	N150
10.7	Mobile Payments:
10.7.1 Interbank Funds Transfer	N100
10.7.2 Intra-bank Funds Transfer	N100
10.7.3 Bill payment	N100
10.7.4 Cash-out Agent (to be borne by the	N100
sender)
10.7.5 Cash-out Branch (to be borne by	N100
the sender)
10.7.6 Mobile Money Card Reissue	N300
10.7.7 Deposit at Agent	N100
10.8	Point of Sales (PoS):
10.8.1 General Merchant	1.25% of transaction value subject to a
	maximum of N2,000
10.8.2 Wholesale	Negotiable subject to a maximum of N2,000
10.8.3 Hotels	Negotiable subject to a maximum of N2,000
10.8.4 Food/Churches/NGOs	Negotiable subject to a maximum of N2,000
10.8.5 Fuel station	Negotiable subject to a maximum of ¥2,000
10.8.6 Airline operators	Negotiable subject to a maximum of 42,000
10.8.7 Travel Agents	Negotiable subject to a maximum of N2,000
10.8.8 Card Charges (International)	2.5% of transaction value
	19

10.9	Bulk Payments Electronic Funds
	Transfer:
10.9.1 Salary payment	Negotiable subject to a maximum of N100 per
	employee.
10.9.2 Vendor payments (payable by the	N150
vendor)
10.9.3 Single payments	No charge
10.9.4 Utility payments	No charge
10.9.5 Tax payments	No charge
10.10	Alert Services:
10.10.1 Mandatory SMS alert	N4 subject to NCC directives
10.10.2 Email notification (optional)	No charge
10.11	PIN reissue	No charge
10.12	PIN reset	No charge
10.13	PIN mailer reprint (foreign currency	Cost of recovery subject to a maximum of $1
denominated cards)

SECTION 11: MISCELLANEOUS

	DESCRIPTION	RATE
11.1	Reactivation of accounts	No charge
11.2	Closure of Accounts:
11.2.1 Savings	No charge
11.2.3 Current	No charge
11.3	Insurance Debits	Customer to negotiate with the insurance
	company
11.4	Issuance of statement of account:
11.4.1 Mandatory monthly issuance of	No charge
statement of account on current and
savings accounts
11.4.2 Special request for statement of	N50 per page
account
11.5	Returned Cheques:
11.5.1 Due to reasons other than being	No charge
unfunded
11.5.2 Unfunded account	0.5% of amount, maximum N5,000 (to be
	borne by drawer). This is without prejudice to
	the Dud Cheque Act
11.6	Reimbursement for business visit	No charge
initiated by customer
11.7	Status enquiry at the request of	0.5% of amount, maximum 45,000 (to be
customer	borne by drawer). This is without prejudice to
	the Dud Cheque Act.
11.8	Verification of customers' documents
with Government Agencies:	Affairs
11.8.1 Search	at	Corporate	Cost recovery
Commission	(CAC),	land
registry, etc

11.8.2 Obtaining Certified True Copy	Cost recovery
(CTC)
11.8.3 Perfection of security for credit	Cost recovery
facilities.
11.9	Confirmation of overseas enquiries to	N10,000 flat
correspondent bank at the instance of
the customer
11.10	Intermediation fees for commercial	Negotiable
papers (to be borne by the issuer)
11.11	Issuance of withdrawal	Cost recovery
Booklet/Passbook
11.12	Customized deposit booklet	Negotiable/cost recovery
11.13	NIBSS/NEFT/NACS etc. - Processing	Negotiable/cost recovery
Fee
11.14	Over-the-counter cash withdrawals	No charge
below the limit set by the CBN cash
withdrawal/lodgment policy
11.15	Inter-branch cash	No charge
Deposits/withdrawals
11.16	Minimum amount for opening	Subject to the CBN three-tiered KYC
accounts	requirements

Glossary

BANKING TERMS	DEFINITION
Access fees	These are fees charged by a financial institution for access to its nctwork
	or distribution/transmission system.
Accepting bank/paying bank	This is a bank which accepts a Bill of Exchange by counter-signing or
	endorsing it and thus incurs the legal obligation of paying the bills
	amount on its maturity date.
	It can also be 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 Guarantee	A guarantee that enables the buyer to recover an advance payment made
	under a contract or order if the supplier fails to fulfill its contractual
	obligations. It is also an irrevocable commitment by a bank to make
	payment if a third party fails to supply specific goods or services.
Advising	This is the 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.c. 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 is called the Advising Bank (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	Fees charged by financial institutions where there is an agreement for
	advisory services.
Amendment	This refers to 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.

BANKING TERMS	DEFINITION
Applicant	This refers to a person who applies to his/her bank to issue a letter of
	credit. In the majority of credits issued, the applicant is an importer of
	goods.
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 arnount 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 Credit	Back to Back letter of credit is an irrevocable LC which serves as
(LC)	collateral for another LC. The 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 (BA)	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 endorscment. 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 Security	This refers to a bond/document purchased by a company or individual
	(bidding on a large project or sale) in order to dernonstrate 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 transaction can take place.

BANKING TERMS	DEFINITION
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	This is 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.
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 Cheques	The fee which a financial institution charges for the collection of money
	from the account of the 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	These are fee charged by financial institutions to keep a line of credit
	open, regardless of use.
Commission on Transaction	This is a fee charged by a financial institution for facilitating a
	withdrawal by its customer.
Confirming/Confirmation	This refers to the 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.
Confinning Bank	This is 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.

	BANKING TERMS	DEFINITION
Contingent Liability	This is 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.
Credit Reference Report	This refers to 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's permission to
	determine his/her credit worthiness.
Daily Balance	This is 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 Instruments	These are investible instruments such as Treasury bills and other Federal
	Government short term debt instruments in which interest is earned
	upfront. Liquidity is guaranteed by the CBN for these instruments and
	are redeemable at any point in time through any authorized dealer
	(Banks and discount houses)
Discrepancy	This refers to 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	This is often used in international trade 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	This refers to the legal transfer of title of a document by signature,
	usually, but not necessarily, on the reverse side.
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
		26

BANKING TERMS	DEFINITION
	period and upon the possible exercise of a buyout clause.
Establishment Commission	Is a commission charged when a bank initiates an outward letter of credit
	under import.
Expiry Date	This refers to the last date on which the beneficiary can fulfill the terms
	of an agreement, failing which the agreement becomes invalid.
Facility Restructuring fee	This is the fee charged where there is an agreement to change the terms
	and conditions of existing facility. This will usually apply when there is
	need to renegotiate a facility.
Foreign Cheque Purchase	This is a service in which value is given on a foreign cheque deposited
	into an account before the cheque clearing processes are completed.
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	This is a banking commission charged for processing both outward and
	inward letters of credit.
Honour	This means 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	This refers to the bank that opens a letter of credit at the request of its
	customer, the applicant.
Indemnities	This is an undertaking given to compensate for (or to provide protection
	against) injury, loss, incurred penalty or from a contingent liability.
Insurance Debt	This refers to the payment of insurance premium on behalf of the bank
	customer to the insurance company.
Inward telegraphic transfer	This is the receipt of funds by SWIFT/Telex from an overseas party. It
	allows the receipt of funds in various currencies all over the world.
	27

BANKING TERMS	DEFINITION
Letters of credit	This is a written commitment to pay, by a buyer's or importer's bank
	(called the issuing bank) to the seller's or exporter's 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	This is a banking fee on electronic cards charged annually in line with
	agreement, where applicable.
MPR (Monetary Policy Rate)	This is the baseline interest rate set by the CBN to control the amount of
	money in circulation at any given time. A higher MPR shrinks money
	supply while a lower MPR expands money supply.
NEFT (NIBSS Electronic Funds	This is an electronic payment system that enables the execution of
Transfer)	transfer instruction between banks on the NIBSS platform.
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 Loan/contract	A negotiable loan/contract is one whose terms can be decided by
	agreement between the parties to the loan/contract.
Negotiation of Documents	This refers to a situation where LC documents are scrutinized as per
	international standard of scrutiny 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
Settlement System)	processing, settlement of 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.

BANKING TERMS	DEFINITION
OD (Overdraft)	This is a 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 Duc	This is a bill or loan that has not been paid on the maturity date/due date.
	This is a computerized payroll software that performs payroll processing
Payroll Solution	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	This is 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	This is the 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	This is a term used by financial institutions to describe the average
	interest rate being charged by lending institutions.
Processing Fees	This refers to money paid to lenders by borrows for collecting needed
	information to setup credit facilities.
Promissory Notes	These are 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 is called revalidation.
Revolving Credit	This refers to 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	This is a bill payable at sight and is payable on presentation to the
	drawee, i.e. on demand.

BANKING TERMS	DEFINITION
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	This is 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	This refers to an account that becomes overdrawn without the bank's
	prior permission. (I.e .: go into an unauthorized overdraft or exceed your
	authorized overdraft limit) the bank will impose penalty charges. e.g late
	repayment of Loan facility.

Minimum Disclosure Requirements In Offer Letters For Credit Facilities /Loans

General Requirements

SIN
l	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	This is the amount approved for the facility.
Amount	The bank should disclose the asset pledged by the
6	Collateral	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.
	The bank should provide in details, the periodic
11	Repayment schedule	amounts to be repaid by the borrower within the tenor of
	the facility.
Early Liquidation Terms	This includes all information the borrower needs to
12	know, including rights/obligations, or penalties, in the
	31

	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
applicable)	policy required for the facility.
16	Conditions	precedent	to	This details all requirements which must be fulfilled by
drawdown	the borrower 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.

(a) Unsecured personal loans; (b) Secured personal loans; (c) Computer loans; (d) Auto loans;

SIN	DISCLOSURE
	REQUIREMENT
1	Name and address of creditor	This includes the name, address and day-time contact details of
		the borrower.
2	Item financed	This states the consumer good(s) to which the bank is
		financing.
3	Itemization of amount	This gives a breakdown of the item(s) being financed.
	financed

(e) Other forms of bridging finance availed to borrowers.

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	The bank is expected to disclose the nature of insurance policy
	(where 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
	drawdown	borrower before drawdown on the facility. Such information
	includes the submission of Insurance documents, perfection of
	collateral documentation, etc.

2. Mortgage Loans

S/N	DISCLOSURE
	REQUIREMENT
l	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	This gives a breakdown of the item(s) being financed.
	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.
g	Collateral	Usually, the security for the loan is the property bcing
	financed.
10	Insurance requirements	The bank is expected to disclose the nature of insurance
	(where applicable)	policy 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.

3. Overdrafts

SIN	DISCLOSURE
	REQUIREMENT
l	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	The bank is expected to disclose the nature of insurance
	(where applicable)	policy 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.