Commercial banks to use study against tariff moratorium

Boitshepo Majube | Friday January 24, 2014 16:06

 

'Should the study point out that Botswana is any more expensive that any other country, we would mitigate against the moratorium,'he said. He said the moratorium slapped on banking tariffs by the Bank of Botswana as the regulator comes at a time when the industry is embarking on a tariff study. He said the moratorium is not a welcome development and they would have loved BoB to effect it after their tariff study. He explained that the association would conduct its study in the country and within the region (neighbouring countries) by comparing tariff charges.

'Bank of Botswana, the regulator communicated well with the industry and is well within its rights,” he said in reference to the tariff moratorium. Mabusa said they would leverage on the study to have the moratorium lifted.

He told the public not to cry about banking fees because there are a lot of innovations in the industry, which in-turn attract charges. 'There is a difference between too many charges and high charges,” he said. He asserted that too many charges does not mean high charges.

(BoB has imposed a two-year moratorium on any upward adjustment of bank charges and fees with effect from January 1, 2014. The moratorium means that no bank will be allowed to make any upward adjustment of banking tariffs (bank charges, commissions, and other non-interest fees) for a period of two years.

The ban does not extend the bank rate linked adjustment of interest rates. “In the case of any new product/service to be availed during the period in question, the related fee/charge will not exceed the fee(s) applicable for existing similar products; such fees will be subject to the bank’s prior approval,” the bank said. BoB explained that it imposed the moratorium in response to the growing public concern about the perceived high level of bank charges and other fees, which are deemed not to be commensurate with the quality of banking services.

BoB stated that during the moratorium period, it will take such measures as deemed necessary to streamline bank charges and, in consultation with appropriate stakeholders, determine the way forward.

Last year government and BoB lambasted high bank charges that are not commensurate with the quality of banking services in Botswana, as reflected in slow service at bank counters, long queues at banking halls and ATMs, especially at month end.  A KPMG report released last year stated that Botswana’s banking sector suffers from challenges like high charges and overall lack of a credit reference system that allows banks to verify the amount of credit that individuals hold in each bank. The report said there are perceptions of a lack of competition, poor service and a lack of innovation. While some of these concerns are real, others may be misplaced, the report said.

It further showed that in Botswana, the main reason people change banks is the quality of service (43%), followed by interest rates (25.3%). The least reason is proximity of banks (5 percent).

Contrary to the Africa-wide report, Batswana do not care much about the financial stability of the bank but would rather have quality service first and cheaper rates later. The survey shows that banks in Botswana need to seriously reduce their waiting times for transactions and requests to succeed.