As part of its efforts to strengthen the payments system in the country, the Central Bank of Nigeria (CBN) has directed commercial banks to allow savings account customers with Bank Verification Number (BVN) to lodge cheques of not more than N2million per customer per day, into their accounts. A circular dated July 28, 2016, signed by the bank’s director in the banking and payment system department, ‘Dipo Fatokun, which made this policy known, also listed other measures taken by the apex bank towards this effect.
These include asking the banks to start embedding BVN in payment cards, to facilitate off-line BVN verification. The bank also removed fixed interest rate on credit cards and discontinued the actual address verification in account opening, for customers with BVN.
The circular stated, inter alia: “The CBN in furtherance of its efforts at strengthening the Nigerian payments system hereby issues the following directives: “The removal of fixed interest rate on credit cards; discontinuation of actual address verification in account opening for customers with the BVN; banks should begin to embed BVN biometric data in payment cards issued henceforth, to facilitate offline BVN verification and biometric based customer authentication on such payment devices as Automated Teller Machines, ATMs, Point of Sales Terminals, POS, Kiosks, etc.”
Until now, savings account holders were not permitted to lodge cheques into their accounts as this was an exclusive preserve of current account customers which, unlike savings account, has a more tedious process to open. What had a semblance of cheque lodgements into savings accounts was the practice by some banks allowing their customers to pay cheques into savings accounts in the same bank, but the transaction was intra-bank as such cheques did not go to the clearing house.
These are welcome developments. Indeed, it is the way to go, especially since the introduction of BVN last year by the apex bank, in conjunction with the Bankers Committee which sponsored the initiative. With BVN, some of the fears associated with paying cheques into savings accounts are eliminated. BVN gives a unique identity that is not peculiar to one bank but can be verified across the Nigerian banking industry. This being so, it should not make any difference whether cheques are deposited into savings or current account since the cheques can now be cleared at the clearing house, using the customers’ BVN.
Cheque lodgements into savings account will help expand the formal base; people hitherto shut out of such transactions – artisans, traders, students, etc. most of whom avoid opening current account due to the charges and the cumbersome nature of opening it can now accept cheques from their clients, instead of cash payment. In a sense, it will also help in boosting the cashless policy of the CBN.
We welcome the developments in the banking sector in recent years because they have made banking easier and much more customer-friendly. Many of the unnecessary documents that bank customers were hitherto asked to produce to do certain transactions, like electricity bills, international passports, etc. will no longer be necessary, courtesy of BVN. Even transactions that customers hitherto spent long time to do in the banking halls can now be done either online or by mere issuing of cheques, irrespective of whether the payee has current or savings account.
However, the objective of cheque lodgements into savings accounts would be better served if there will not be commission on transaction (COT), which is one of the reasons many people run away from current accounts. Alternatively, the charges should be customer-friendly such that those paying it would hardly notice.
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