Cash deposits do attract a specific charge, house told

LEKOPANYE MOOKETSI
Correspondent | Monday August 20, 2012 00:00

 

Assistant Minister of Finance and Development Planning, Gloria Somolokae said with regard to cash deposits, practices differ significantly in the banking industry, with most banks imposing a specific charge on cash deposits.   Only two of the major commercial banks, she said, do not impose a specific charge for cash deposits. 

'The typical structure of the cash deposit fee has a free cash deposit element for up to a specified amount and a percentage of any amounts in the excess of that specified amount.  The rationale for a specific cash deposit fee is that cash handling is costly to the banks,' she said.

Somolokae told the House that in the case of one large bank, a cash deposit in the excess of P1, 500 attracts a charge of 0.4 percent of the amount; the first P1, 500 is free.  She said in the case another, the first P2, 000 is free and above this amount, the bank charges 0.4.5 percent of the amount. 

The assistant minister said consistent with the requirement of the Disclosure of Bank Charges Notice 2001, banks are obliged to publish their current schedules for banking tariffs and display them in a conspicuous place within their banking halls to give consumers essential information on which to make informed decisions.  She said customers are at liberty to request the charge for a service/product if the charge is not reflected in the published tariff guide. 

She added that in line with government policy on encouraging competition amongst service providers, charges levied by licensed commercial banks are not regulated.  However, she said, pursuant to Clause 15 of the Disclosure of Bank Charges Notice, 2001, banks are required to submit banking tariffs to the Bank of Botswana (BoB) for review and assessment of their reasonableness before implementation.

'This requirement is in recognition of the growing public concerns regarding the perceived onerous bank charges as well as the quality of banking services in Botswana.'Somolokae said in reviewing any proposed new fee or proposal to increase an existing banking charge, the central bank takes into account, inter alia, the prevailing economic circumstances, the justification provided by a bank for the proposed charge, a detailed breakdown of costs the banks will incur in providing the service. She admitted that it is true that transaction based fees on cash deposits may be viewed as a disincentive to save.   However, she pointed out that is equally true that a profitable, competitive and sound banking system is necessary for a stable macro-economic environment, a key prerequisite for the promotion and sustainable mobilisation of household financial savings.    Other complementary policies, she said, include maintenance of appropriate and sound macro-economic policies, enhanced and cost effective access to financial services, encouragement of innovative products and financial literacy.

Somolokae said against the background of improved public infrastructure and supportive government policies, banks continue to invest in new technologies and introduce innovative products and services that encourage financial savings.   She was answering Boteti North Member of Parliament Slumber Tsongwane who wanted her to update Parliament on current commercial bank charges levied on those depositing cash as opposed to cheque deposits.

He also wanted the minister to state the charges as imposed by various commercial banks operating in Botswana and whether such charges were regulated and how.