Here are Answers to your Frequently Asked Questions on Banks

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Why do I get many charges from my bank?
Ans: Most charges by the banks are legal and regulated by CBN. They are tied to the actual bank product or service you subscribe to. However, knowing what the different charges represent enables you to know the services and products to activate and de-activate. Having said this notwithstanding, banks could make mistakes in charges or debits passed to your account sometimes which is the reason why you need to always know what the different charges are at every given time.

Are all the charges on my account for the bank?
Ans: Not all charges made by the bank go to the bank. Some of them are either CBN charges, or Government charges depending on what charge it is. For example the ₦50 duty stamp charge on your account goes to the CBN from which the necessary agency is credited, VAT charges are for the Federal Government (FIRS) and are remitted to them likewise some other charges. The bank only serves as a channel through which most of these charges are passed.

Why can’t I easily get a loan from the bank?
Ans: This is because the money you’re seeking from the bank is not yours. They are funds of other customers being gathered to be granted to you as loan and as a result, due process must be taken to ensure that the funds are not given to wrong people.

When do I qualify to get a loan from my bank?
Ans: Firstly, after you might have transacted meaningfully with the bank for a period of time (usually a minimum of 6 months). Also, when you have been able to give the bank a tangible reason for seeking the loan. Playing the role of financial advisory, the bank is supposed to be able to weigh the purpose for which you are seeking the loan and be convinced that the business will be able to re-pay the loan. This is the reason why banks advise for full disclosure and straightforwardness during a loan request process.

Is it possible to get a loan without collateral?
Ans: Banks do not give loans because of collateral, yet they do not give loans without collateral. The major source of repayment of any bank loan should be from the primary business in which the loan is intended. However, collateral are supposed to be a secondary way out in cases when the loan cannot be recovered from the direct business/purpose of the loan.

Why is the interest rate for loans usually too high?
Ans: Most times, the interest rate placed by banks on their loan are usually determined by the Monetary Policy Rate (MPR) and the Cash Reserve Ratio directed by CBN. The MPR is the interest rate at which banks get loans from CBN and as such, the higher the MPR, the higher the interest rate banks will place to grant loans to their customers. More also, the Cash Reserve Ratio (CRR) is the percentage of a bank’s total deposit which they are supposed to leave with CBN as reserves. The higher this ratio, the more difficult it will be for banks to further disburse loans to their customers.

Why does interest rates differ with banks?
Ans: It is business and strategy. A bank might choose to play high in certain types of loans while they play low in others. More so, it could just be a tactic to increase their asset for that period.

Why does my bank never grant loans?
Ans: They do. May be not to you or to your class of account holders. Again, it is strategy. They choose the field in which they want to play.

More Answers to your Frequently Asked Questions to come soon…