E-Financial
Court Orders First Bank to Pay Interest of N2.9Bn to FAAN
A Lagos Federal High Court has ordered First Bank of Nigeria (FBN) Plc to pay the sum of N2,937,925,388.52 billion, to the Federal Airports Authority of Nigeria (FAAN) being an interest for not disclosing under-payment of credit interest on deposits in 14 different current accounts domiciled with the bank.
Justice Ayokunle Faji, while delivering judgment in suit numbered FHC/L/CS/67/2021 filed by FAAN, also held that First Bank breached its own professional Code of Ethics, by not disclosing all information on goods and services offered, including the interest rate payable by the bank.
Justice Faji made the above orders and declarations in a judgment delivered on October 9, 2023.
The plaintiff (FAAN) had in its originating Summons dated and filed on January 13, 2021, urged the Court to determine whether First Bank is entitled to pay interest on the applicant’s (FAAN) current deposits in lime with the Central Bank of Nigeria Monetary, Credit Foreign Trade and Exchange Policy Guideline of 2004/2005 No 37, Section 3, Sub-Section 3.2.4(a) Interest Policy, which states that “Banks shall continue to pay interest on current account deposits at rates negotiated between them and their customers.
Consequently, the applicant seeks the following reliefs: “An order for the payment of interest on the underpayment of interest on the current account deposits of the applicant at the respondent’s maximum lending rate from 1st September 2018 up to the date of refund.
“An order for the payment of the sum of N2,117,955, 865.01 billion, being interest on underpayment of credit interest on deposits in the applicant’s current account numbers.
“An Order for the payment of the sum of N819, 969, 523.51 million, being credit interest payable on the applicant’s current account deposits in account numbers: A declaration that in pursuance of the Central Bank of Nigeria Monetary, Credit, Foreign Trade and Exchange Policy Guidelines (Monetary Policy Circular), the Applicant is entitled to credit interest on its current account numbers 2004728814, 2004730671, 2004731403, 2004747983, 2012104714, 2012114742, 2013512417, 2020114013, 2020114439, 2020119427, 2020210135, 2020,211974, 2020213521 and 2020268284; deposits with the respondent.
“A declaration that in pursuance of the Central Bank of Nigeria Monetary, Credit, Foreign Trade and Exchange Policy Guidelines (Monetary Policy Circular), the applicant is entitled to receive interest on the credit interest the respondent failed to pay on the current account deposits of the applicant.”
But, in response to the Originating Summons, the First Bank in its 32-paragraph counter affidavit, raised two issues for determination to wit: “Whether having regards to the absence of any negotiation and/or agreement between the applicant and the respondent for payment of interest on the applicant’s current account with the respondent, the applicant is entitled to the reliefs sought on the face of the Originating Summons?
“Whether given the Central Bank of Nigeria’s circular “Time Bar for Resolution of Customer’s Complaint” dated 21st August 2015, this suit is statute-barred and constitutes an abuse of court process?”
First Bank stated that by Section 3.2.10 (a) of the Central Bank of Nigeria Monetary, Credit, Foreign Trade and Exchange Policy Guidelines, the words used in the said Section 3.2.10. (a) are clear and plain and should be given literal or ordinary meaning. It follows, therefore, that before interest can be paid on a current account, the interest rate should have been negotiated and agreed upon between the customer and the bank.
The bank further argued that the applicant did not exhibit or refer to any document to show that it approached or negotiated with the respondent on the interest rate to be paid by the respondent for the credit balances in the applicant’s current accounts with the respondent.
It also stated that the applicant has failed to discharge the burden placed on it by placing sufficient materials before the court, therefore the reliefs sought cannot be granted.
Delivering judgement on the issues raised, Justice Faji held that in line with paragraph 2 of the Bank Customer Bill of Rights and Duties and paragraph 3.5(b) of Nigerian Banking Industry (Professional Code of Ethics and Business Conduct), First Bank is duty bound to disclose to the applicant all information on goods and services offered.
“This seems to me to impose a duty on the defendant as part of the ethics of the banking profession. This is where I therefore have reason to hold that the defendant indeed failed to disclose the interest regime to the plaintiff without which the plaintiff would not have been able to know that the interest was to be negotiated and thus make the first move.
“In any event, it is apparent that a banker owes its customer a fiduciary duty and given the rules guiding the ethics of the banking industry, it seems to me that there was a duty on the defendant to inform the plaintiff of its right to negotiate interest. That duty is imposed by the code of ethics aforesaid which is binding on all banks in Nigeria, the defendant inclusive.
“That is in my view the basis for the fiduciary duty owed the plaintiff by the defendant. It is a code of ethics which the defendant ought to have followed and by which it is bound. By not disclosing such information to the plaintiff, the – defendant had breached its professional code of ethics and that in my view was done to gain an unfair advantage over the plaintiff as regards the payment of interest on current accounts. By those rules, the plaintiff is entitled to information upon which to have a basis to negotiate interest which was not availed by the defendant.
“Furthermore and by paragraph 3.5(b) of Nigerian Banking Industry (Professional Code of Ethics and Business Conduct) 2014, banks are under an obligation to inform their customers about the interest rates applicable to/payable on their deposit, fixed, savings and other accounts.
“This shows clearly that the defendant violated its code of ethics. It is also not in dispute that the interest has not been paid. The plaintiff calculated its expert. The defendant contends that the defendant was not involved in the computation of the interest as done by the plaintiff’s consultant.
“The defendant did not however state its calculation or show its own experts’ report. It also did not an expert show that plaintiffs’ calculations are wrong. I believe the contents of the report tendered by plaintiff’s expert who has shown evidence of experience in matters of this nature.
“I hold that the sums therein stated are due to be paid by the defendant and ought to be so paid. I hold that the sums determined as unpaid interest are due to the plaintiff from the defendant and the defendant is therefore ordered to pay the sums claimed.
“This action therefore succeeds. I answer the 4 questions for determination in the affirmative and in favour of the plaintiff. I grant the declarations sought in reliefs 1 and 3 and make the orders sought in reliefs 2, 4 and 5,” the judge held.
Central Bank of Nigeria (CBN) has announced that eligible Bureau de Change (BDC) operators will have temporary access to the Nigerian Autonomous Foreign Exchange Market (NAFEM) to purchase $25,000 weekly. This arrangement, aimed at addressing seasonal foreign exchange (FX) demand, will be effective from December 19, 2024, to January 30, 2025.
In a statement signed by T.G. Allu, CBN’s acting director of trade and exchange, the apex bank said BDC operators would buy FX from authorized dealers—banks licensed by the CBN—exclusively to meet retail market demand.
“To meet expected seasonal demand for foreign exchange, the CBN is allowing temporary access for all existing BDCs to the NAFEM for the purchase of FX from Authorized Dealers, subject to a weekly cap of $25,000,” the statement read.
BDC operators must fully fund their accounts before accessing the market at prevailing NAFEM rates, choosing only one authorized dealer for transactions under this arrangement. A maximum price spread of 1% is allowed for retail pricing by BDCs, and all transactions will be reported to the CBN’s Trade and Exchange Department.
The CBN reiterated that personal travel allowance (PTA) and business travel allowance (BTA) remain available through banks for legitimate travel needs. The bank emphasized that all FX transactions must be conducted at market-determined exchange rates.
“The CBN remains committed to a fully functional foreign exchange market and will continue to provide liquidity when necessary to manage price volatility,” the statement added.
Earlier in September, the CBN approved FX sales to eligible BDC operators at a rate of N1,590 per dollar to cater to demand for invisible transactions, reflecting ongoing efforts to stabilize the FX market.
Central Bank of Nigeria (CBN) has announced that diaspora remittances through international money transfer operators (IMTOs) reached $4.22 billion between January and October 2024.
This figure represents a 61 percent increase, or $2.62 billion more than the amount recorded during the same period in 2023.
CBN Governor Olayemi Cardoso shared the figures during an interactive session with the Senate Committee on Banking, Insurance, and Other Financial Institutions at the National Assembly on Wednesday. “The year-on-year increase reflects significant growth,” Cardoso noted.
He also reported that remittances rose from $336 million in September 2024 to $402 million in October 2024 on a month-to-month basis.
Cardoso expressed optimism about continued growth in remittance inflows, saying, “The remittance inflows would continue to rise by the end of the year, given the current trajectory.”
He attributed the surge to improved efficiency in the remittance system, the positive effects of President Bola Tinubu’s policies, and increased trust among Nigerians in the diaspora to contribute to national development.
In addition to remittance updates, Cardoso addressed the state of Nigeria’s external reserves, which he said had grown to $42.01 billion as of December 12, 2024, from $38.35 billion on September 30, 2024.
“External reserves rose largely due to receipts from crude oil-related taxes and third-party receipts in Q3 2024,” he explained.
He added that Nigeria’s external reserves could fund over nine months of goods and services imports, surpassing the international benchmark of three months. “Our external reserves level is a robust buffer against shocks,” Cardoso said.
On the issue of cash shortages, the CBN governor reiterated the enforcement of the new policy imposing a fine of N150 million on any bank branch found distributing new naira notes illegally to currency hawkers.
Cardoso also shared his outlook for the Nigerian economy in 2025. “Distinguished Senators, as we conclude this briefing, I want to highlight that despite the challenges facing our economy, there are clear reasons for optimism,” he said.
“The gradual stabilisation of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”
This comes as the CBN continues to implement measures to strengthen the economy. On October 17, the apex bank reported that remittance inflows had risen to almost $600 million by the end of September, while on June 25, it granted eligible IMTOs access to trade on the official FX window.
The Nigerian banking sector has witnessed a concerning rise in fraudulent activities, with incidents of fraud in bank branches increasing by 31 percent in the second quarter of 2024.
This alarming statistic was disclosed by the Financial Institutions Training Centre (FITC) in its Fraud and Forgeries report, highlighting significant challenges to the integrity of the country’s financial system.
Fraudulent activities in Nigerian banks led to a staggering N42.33 billion in reported losses during the first half of 2024.
This sharp rise was driven by escalating fraud across multiple channels, most notably within physical bank branches.
The FITC report revealed that fraud in bank branches rose dramatically to N42.2 billion in the second quarter, compared to N133.9 million in the first quarter.
The FITC data also pointed to a massive 1,560.3 percent increase in computer and web fraud. Losses in this category surged from N24 million in the first quarter to N400.8 million in the second quarter.
In contrast, mobile fraud witnessed a significant decline, dropping by 59 percent from N216.4 million in the first quarter to N88.7 million in the second quarter.
Interestingly, no cases of ATM-related fraud were recorded during the period under review.
The figures also indicate a shift in fraudulent activities involving various financial instruments. Card fraud saw a notable decline of 47.66 percent, with cases dropping from 21,469 in the first quarter to 11,231 in the second quarter. Conversely, cheque-related fraud rose by 36.67 percent, increasing from 30 cases in the first quarter to 41 in the second quarter.
Mobile fraud recorded an even steeper decline in value terms, dropping by 99 percent from N21.6 billion in the first quarter to N216.36 million in the second quarter.
These figures suggest evolving strategies among fraudsters, with some methods becoming less prevalent while others gain traction.
Amid the rising tide of fraud, legal actions have also intensified. In one notable case, an Abuja Federal High Court issued a 30-day freeze on 818 bank accounts linked to a N10 billion cyberattack on a Nigerian bank.
The court’s directive, issued on October 15, 2024, was based on a motion filed by the police against James Akagwu Isaac and other suspects, including several financial institutions.
Analysts say the surge in fraudulent activities underscores the urgent need for heightened vigilance, enhanced security measures, and robust regulatory interventions in Nigeria’s banking sector.
While the decline in some fraud categories, such as mobile and card fraud, offers a glimmer of hope, the sharp rise in branch-based and web-related fraud highlights the evolving tactics of fraudsters.
To combat these threats effectively, experts recommend that banks must invest in advanced fraud detection systems, conduct regular staff training, and strengthen internal controls.
Collaboration between financial institutions, law enforcement agencies, and regulators will also be crucial in mitigating the impact of fraud and safeguarding the financial ecosystem.
The FITC report serves as a stark reminder of the vulnerabilities within the banking sector and the need for proactive measures to address them. Without sustained efforts, the rising trend of fraud could pose significant risks to Nigeria’s economic stability and the trust of consumers in the financial system.
Credit: Tribune
Group Advocates for Digital Rights at 2024 Internet Governance Forum
Patricia Technologies Begins Repayments to Customers Affected by 2022 Security Breach
CBN Permits BDC Operators to Buy FX from NAFEM During Festive Season
From Niche App to Global Giant: TikTok’s Controversial Journey
Aero Contractors Celebrates Long-Serving Employees at Award Ceremony
UBA Group Sets Foot in France with Full Banking Services
FG Begins N50 Electronic Levy Deductions from Moniepoint, Other Digital Banks
Report Reveals Most Organisations Fear AI-driven Cyberattacks but Lack Key Defences
Nigeria Risks Missing out on $1.2 Trillion AI Opportunity- NigComSat
Firm Sues NIMC, Others On Digital Rights Breach Allegations
E-Business3 days agoRide the ‘Wicked’ Wave: Temu Brings Green Magic to Christmas
Telecom3 days agoNCC Holds Virtual Forum on A2P Licensing Framework
News3 days agoPalmPay, Jumia Reward Users in Festive Campaign
Telecom21 hours agoFrom Niche App to Global Giant: TikTok’s Controversial Journey
Telecom21 hours agoGroup Advocates for Digital Rights at 2024 Internet Governance Forum
Broadcasting21 hours agoAero Contractors Celebrates Long-Serving Employees at Award Ceremony
E-Financial21 hours agoCBN Permits BDC Operators to Buy FX from NAFEM During Festive Season
Telecom21 hours agoPatricia Technologies Begins Repayments to Customers Affected by 2022 Security Breach