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BoB should tighten screws on banks ľ BIDPA

ISAAC PINIELO
In January the central bank conditionally lifted a two year- year moratorium on increases in bank charges and fees
The Botswana Institute for Development Policy Analysis (BIDPA) has called on Bank of Botswana (BoB) to tighten the screws on commercial banks.

In a recently released special briefing reviewing the bank charges in Botswana, BIDPA said as the regulator, the central bank must consider mechanisms to enhance consumer education, by encouraging the commercial banks to make information on their charges available to the public. This, according to BIDPA, would assist the public make informed choices between the banks and between the different services offered within the banks.

It accused commercial banks of not adequately availing information on their bank charges to the public, adding that making information available and continually updating it is essential, particularly in this era where commercial banks constantly add new products to their service menus. “Availability of such information could play a positive role in broadening financial inclusion and improving access to banking and financial services. Hence, the banks’ tariff books need to be made available to the public and should be regularly updated to show charges especially of the new services,” said the research organisation. BIDPA asserted that the use of the banks’ websites to publish updated bank charges should certainly not be a costly medium to avail such information to the public. According to the research organisation, bank charges differ from one bank to the other, and in some cases, the differences are vast.

It said punitive charges and charges for processing loans and overdrafts are generally high also, which suggests that it may be worth the central bank’s consideration to set the maximum values charged for such services such as loan administration or processing fees and penalties for dishonoured cheques and unpaid debit orders. “In other jurisdictions such as South Africa, capping charges for certain services has been implemented,” BIDPA said.

 Mmegi recently learnt that an

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audit carried out by four firms found ‘several violations’ in which local banks charged clients fees higher than the ones they officially published.

The revelations came as the BoB in January conditionally lifted a two-year moratorium on increases in bank charges and fees.

The central bank placed the moratorium in January 2014 citing long running and widely held sentiments that rising bank charges and fees were not only an impediment to banking access, but also a disincentive to savings.

Although Botswana has made progress in increasing the level of use of Internet Banking, BIDPA said they believed that other transactions such as transferring funds are still mainly made over the counter.

It said specific consumer education activities should be implemented to enhance consumer education on the use of bank charges generally and the advantages of technology based services in particular. On comparing bank charges here with those on Botswana peers in the region, BIDPA found that local charges in Botswana are comparable to those of the three selected countries in the region including Mauritius, Namibia and South Africa.

However, BIDPA observed that while charges for normal services were more or less the same as those in the region, punitive charges are significantly higher in Botswana, noting that most of Botswana’s banks should consider revising these charges to reflect the true cost of offering these services to their customers.

BIDPA concluded that the charges or fees that commercial banks levy on their customers for providing them with services continue to be an issue of concern, noting that bank service fees were generally similar and high across banks, making it difficult for customers to choose between them on the basis of bank charges.



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