In favor of the people, a Federal High Court sitting in Asaba Delta State has ruled that it’s illegal for banks to charge depositors N50 stamp duty.
The ruling delivered on December 9 puts an end to the controversial policy introduced by the Central Bank of Nigeria (CBN) earlier. The presiding Judge, Justice Nnamdi Dimgba said in the verdict that the CBN and all banks should immediately stop further collections of stamp duty fees from Nigerians because the Stamp Duties Act does not have provision for such taxes.
“… there was no express provision in the Stamp Duties Act or any law authorizing the deduction or imposing any obligation to deduct and remit N50 as stamp duty on teller deposits or electronic transfers of monies from N1,000 (one thousand naira upwards and accordingly nullified same, the conduct of the 1st and 2nd defendants in continuing to impose, direct the imposition, receive and or charge, deduct or remit the said sum of N50 as stamp duty on teller deposits or electronic transfers of money transactions from N1,000 upwards from the account of the plaintiff domiciled with the 2nd defendant is wrong in law, dismissive and contemptuous of the lawful orders of superior courts of competent jurisdiction, condemnable, null and void and of no effect,” the court’s judgment said.
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A Nigerian businessman, Rupert Irikefe had, last year, filed a suit against the CBN, Attorney-General of the Federation and Zenith Bank, challenging the decision to impose N50 stamp duty charge on depositors.
Following CBN’s directive, Nigerian banks have been charging N50 on transactions above N1,000, a development that was seen as exploitation by depositors.
The court awarded Irikefe N50,000,000 in damages for the inconveniences and pains caused by the unlawful and arbitrary imposition of the N50 stamp duty on his account.
Justice Dimgba reprimanded Zenith Bank for its actions given that Appeal Court had in 2014, ruled in favor of depositors in a similar case. Dimgba said the Appeal Court should have served as a basis for the bank to reject the directive of CBN on N50 stamp duty charges.
Meanwhile, the central bank has approved new licensing for different categories of payment in Nigeria. This decision was communicated on Thursday through a circular signed by Musa Jimoh, director of payments, system management department of CBN, to all financial institutions.
The apex bank said the approval stems from its commitment to promote a strong and credible payment system as it offers clarity for new and existing market participants based on the significant evolution and innovation in Nigeria payment system.
The payment licenses are thus streamlined according to permissible activities in four broad categories including switching and processing, mobile money operations (MNOs), payment solution services (PSSs) and regulatory sandbox.
The central bank explained that under the new license, only MNOs are permitted to hold people’s money.
“Only MNOs are permitted to hold customer funds; companies seeking to combine activities under the switching and MNO categories are only permitted to operate under a holding company structure with the subsidiary entities.
“Payment system companies in the PSS category may hold any of payment solution service provider (PSSP), payment terminal service provider (PTSP) and super agents license or a combination of all.
“All licensed payment service providers are required to obtain a no-objection from the payments system management department. Collaborations between licensed payment companies, banks and other financial institutions in respect of products and services are subject to CBN’s prior approval,” CBN said.
According to the Apex bank, the minimum capital requirement for MNOs is N2 billion; switching and processing, N2 billion; PSS, N250 million; super agent, N50 million; payment solution service provider, N100 million; and payment terminal service provider, N100 million.
Both developments are a win for Nigeria: The High Court judgment has eased the pain of arbitrary charges that have been imposed on Nigerian depositors by the apex bank; on the other hand, CBN’s licensing for new categories of financial services has provided regulatory bases for fintech in Nigeria.
With the fintech ecosystem on the rise, interested players now have a guideline to develop their payment systems.
Collecting money is one thing, knowing what to do with it is another; Nigeria has never been great at the latter, anyway. With all the collections and deductions, our fortunes haven’t really improved, because there’s no ordinary day in Nigeria.
As for payment system licencing, if we pay half of the attention we give to payment system to production systems, we would have reduced unemployment greatly, with an improved standard of living. We need to devote more time and energy to creating systems that generate the money, rather than circling and scrambling to get a cut from the paltry sum we generate as output here.
You are right. If we pay attention to production system our nation will be great. However the inability of the nation to generate power needed by manufacturing sector for decades is a big sabotage
It’s heartbreaking how our government & her agencies would hardly collaborate with the private sector. All efforts are aimed at stifling these sectors. They do absolutely little or nothing to support but are quick to design regulations that make participation a lot more difficult
How would they even collaborate when the agencies are full of obsolete people that lack understanding of contemporary & global business phenomena
You got it wrong. Please correct your article. It is MMO and not MNO.
You are right. If we pay attention to production system our nation will be great. However the inability of the nation to generate power needed by manufacturing sector for decades is a big sabotage
It then implies that ALL the Banks should
immediately refund ALL Stamp duty charges to the affected customers.
And as well pay damages for inconveniences and pains caused by the stamp duty charges…
Nigeria is totally OPEX centered in terms of investments. Money has no intrinsic value. This last 11 days, I went around a couple of places and I was quite impressed that there were a lot of busines/trade activities. However, they were geared towards imported technology items and services. There were condensation or even over-saturation of same type of industry per 5 square mile.
The debilitating factor is that there was lack of stock and where there was stock, no warranty or guarantee.
There was almost negligible innovation and no sign of continued improvement.
In terms of beverage, the soft drinks comprised of very high sugar products that have been banned abroad or now have high taxation imposed. Nigerians will soon be dying of diabetes.
It would nice to see Nigerians get back part of such deducted charges from their accounts in recent years ASAP
All banks should please refund all the 50 naira debits so far
Let our monies be refunded asap
Zenith Bank and Firstbank has been cutting off my deposits because of this. Sometimes it gets up to N200 as a stamp duty. Highly unacceptable and I wish they will just refund it as well.
I doubt if the current government have the interest of Nigerians at heart. Instead of to improve the purchasing power of people in a reccessed economy CBN decided to stifle it further with ill-timed policy.
The CBN is acting counter productive. The question the CBN need to be asked is this, it should tell Nigerians what was it trying to achieve with the stamp duty. Is deposit of money. Prohibited by any law? Why the stamp duty? Uptil this day I cannot imagine what the CBN is aiming at. Such a bad policy.
Thank you Tekedia, and all your contributors. Tekedia has been the best platform to read and understand hitherto very confusing Nigeria financial sector activities. Frankly since I started reading your publication Prof, and that of your team I have never been bamboozled by either CBN or Banks public statement/notice. Thanks.
When are they going to refund all deducted. Am really angry with Nigeria banks.
So, what the banks illegally deducted will not be refunded to banks customers? The victory is incomplete.
Pay back will be awesome ? unfortunately they will never approve it.