CBN to Ban Sale of Recharge Cards, Others by Banks
By Tayo Ajakaye
Bombarded by petitions from numerous quarters against the sale of recharge cards and other telecommunications products, the Central Bank of Nigeria has started the process of stopping banks from further sales of telecom products.
In one such petitions by the Association of Licenced Telecoms Distributor of Nigeria (ALTDON), dated May 3, 2004, the Association protested to the CBN governor the fact that banks permit the sale of GSM products in their banking premises thereby creating an impression that they can legitimately deal in the wholesale and/or retail of these products.
Quoting section 20 (1) and (2) of Banks and Other Financial Institutions Act No 25 of 1991, ALTDON said that in view of the banking licence granted the commercial banks, the banks have no basis to engage in ventures not within the contemplation of their licence.
In the letter signed by its President and Secretary, Dr. Ayo Ojo and Alhaji AbdulRahman Abiola-Odunowo respectively and attentioned to the Director, Banking Supervision, ALTDON further stated: "Given the above provision, a bank cannot legally engage in a trade unless it procures the permission of the CBN of the trade is exceptionally necessary in the course of banking operations."
ALTDON further contended that even if the banks had sought the approval of CBN to engage in telecoms product retailing, the apex bank had no power to grant such.
ALTDON insisted that sale of GSM products is not incidental to the course of banking operations and the dispensation of the banks' duties and obligations to their customers.
Hence it told CBN, "we hereby register our objection to the sale of the said GSM products by the banks and we accordingly appeal that you use your good office to ensure that this unlawful and unjustified practice is immediately put to an end"
It gave a list involved in the practice as including Assurance Bank Nigeria, Diamond Bank Nigeria, Liberty Bank, First Atlantic Bank and Equity Bank of Nigeria.
Also mentioned are Standard Trust Bank, Broad Bank, Gateway Bank, Union Bank of Nigeria and Citizens Bank
Others are Intercontinental Bank, Zenith International Bank, United Bank of Africa, First Bank of Nigeria, Capital Bank International, Triumph Bank and New Nigerian Bank.
According to ALTDON, if these Banks are not stopped, they will run NCC licenced distributors into bankruptcy, since the banks have easy access to cheap funds which are not readily available to the licenced distributors.
In a letter responding to the complaint, the CBN in a letter signed by Mr. G A Onoja for the Director, Banking Supervision acknowledged the receipt of ALTDON letter and asked for more details on the GSM products being traded in by the respective banks. This is to enable further action on the letter. The latter was dated June 1, 2004.
ALTDON in a June 7, 2004 letter to the Bank listed the telecom products in issue as SIM packs, Starter Packs, GSM Handsets, Recharge Vouchers & BoosterCard, Virtual vending of airtime and fixed wireless phones.
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