CSPR welcomes BoZ abolishment of unwarranted bank charges

Civil Society for Poverty Reduction (CSPR) Executive Director Patrick Nshindano has observed that financial institutions have failed to effectively provide affordable financial services and manage customer deposits.

Nshindano made the comment in the wake of Bank of Zambia’s notification to financial institutions to abolish unwarranted charges, including ATM charges and account charges on clients.

He said financial institutions had resorted to the easier way of making profits by slapping high charges on the customer accounts.

“As the civil society for poverty reduction we fully support and welcome the Bank of Zambia directive for commercial banks to revise and abolish some bank charges slapped on customers on different services offered. Financial inclusiveness is a critical component for national development and poverty reduction and the high bank charges on customer accounts and services discourage savings especially for the low-income category. We also note that banks and financial institutions generally have failed to play their role effectively of providing affordable financial services and managing customer deposits and instead resorted to the easier way of slapping high charges on the customer accounts. Further to this, banks continue to offer high interest loans and very low interest savings whose interest is also eroded by the bank charges,” he said.

“Banks should aim at providing an incentive to grow savings which they in turn invest into different instruments as opposed to milking the savings of depositors. Further to this, most of the services charged by the banks to the customers are not fully known and banks do very little to inform customers of the charges on the different kinds of accounts and services. Customers must therefore also take it upon themselves to find out the charges that will accrue to the respective account or service they intend to acquire and make an informed decision based on affordability. It’s our belief that bank charges should never be a deterrent to promoting savings as is the case now and should be charged within affordable limits for the consumers of bank services. Many Zambians especially the poor continue to be exploited with little to no recourse and if the banking sector is not able to offer quality and affordable services to the public its only right that government through BOZ intervenes.”

He said BOZ needed to also help create an enabling business environment that would spur domestic private sector growth and participation.

“We believe that such measures will grow the financial sector through increased savings which in turn will lead to increased access to much needed affordable finance especially for the SME. In conclusion, BOZ should not end at the point of regulation but also through the respective line ministries such as Ministry of Finance, promote an enabling business environment that will spur domestic private sector growth and participation including reduced government domestic borrowing which crowds out the private sector and pushes interest rates up.”

         

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