Nigerian banks may lose up to N100 billion in revenue following the introduction of the zero Commission on Transactions (COT) policy in 2016.
It is the last phase of the “Guide to Bank Charges” policy initiated by the Central Bank of Nigeria (CBN).
According to a former Executive Director of Keystone Bank, Richard Obire, of the annual N550 billion average revenue for the 21 banks, about N100 billion come from COT.
Obire explained that bank’s revenues are made up of interests on loans, which constitute 70 per cent of the total revenue. Fees and commission make up the remaining 30 per cent. Fees and commission covers 30 per cent of the total revenues. COT constituting 60 per cent of income within the segment.
The “Guide to Bank Charges” implementation, which started in March 2013, has seen the COT gradually drop to N3 per mille in 2013; N2 per mille in 2014; and N1 per mille in 2015 to Zero COT per mille started on January 1.
In a circular titled: “Implementation of Revised Guide to Bank Charges –Commission on Turnover,” posted on CBN’s website and signed by its Deputy Director, Financial Policy and Regulation Department, Franklin Ahonhai, the regulator said there was no going back on the policy implementation.
The circular mandated banks that charged excess COT since the effective date to refund same to the affected customers or be sanctioned.