FG Directs Access, Zenith, UBA, Others to Begin Important Deductions on Loans, Banks Write Customers

• The federal government has directed commercial banks to begin stamp duty deductions on loans by bank customers
• The directive says deposit money banks are to make 0.375% deductions on all loans by the bank customers
• The move is the sequel to other deductions by the banks on foreign currency transactions and electronic money transfer levy

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Nigerian government has asked commercial banks in Nigeria to deduct and remit 0.375% of all loan disbursements to bank customers.

According to the directive, the deduction is to be made on the principal loan amount.

Banks send messages to customers

The development is in a message sent to bank customers by some financial institutions.

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The Nigerian government is reportedly seeking to expand the net on transactions covered by the stamp duty charges from regular bank customers to foreign transactions and, recently, on loans.

In January this year, the banks sent messages to customers informing them of another directive by the Nigerian government to deduct stamp duty on old foreign currency transactions between January 2021 and December 2023.

FG directs deductions on FX transactions

The Nigerian government has also made deductions on bank accounts that receive N10,000 and above, known as Electronic Money Transfer Levy (EMT).

Reports say the banks sent messages to customers on Wednesday, March 27, 2024, informing them of the new development.

The Federal Inland Revenue Service (FIRS) says Stamp Duty is an indirect tax in Nigeria regulated by the Stamp Duties Act (SDA), CAP S8, LFN 2004.

What FIRS says about Stamp Duty

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According to the Federal Inland Revenue Service (FIRS), Stamp Duty is an indirect tax in Nigeria governed by the Stamp Duties Act (SDA), CAP S8 LFN 2004 (as amended).

The Act said it is tax charged for a stamp or seal applied on a written or electronic document, which, if executed, makes it a legal document and is admissible in a law court.

The development comes as the Central Bank of Nigeria (CBN) increased Nigeria’s interest rate by 200 basis points to 24.75% to hedge against inflation.

The latest development is CBN’s pushback against the country’s raging inflation, which hit 31.75% in February 2024.

Access, Zenith, and other banks set to make changes to savings accounts

Legit.ng previously reported that commercial banks in Nigeria are expected to effect critical changes on customers’ savings accounts in the coming quarter to hedge them from being eroded by inflation.

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Naira gains against dollar: Nigerian man lists reasons why CBN is getting it right

Nigeria’s inflation rate hit an all-time high in February 2024, at 31.70%, one of the highest in Africa.

Analysts say the Central Bank of Nigeria (CBN) will take critical steps in protecting customers' funds from inflation by raising the Monetary Policy Rate (MPR), the second since Olayemi Cardoso, CBN’s boss, assumed office.

Source: Legit.ng