Finance ministry, BoN investigate bank charges

The Bank of Namibia (BoN) and the Ministry of Finance and Public Enterprises have announced the formation of a joint committee to investigate and set maximums for the fees commercial banks are allowed to charge clients.

This was confirmed yesterday by finance ministry spokesperson Wilson Shikoto.

“We are working with the BoN to develop regulations on fees and charges in full compliance with the law. There is a working committee,” Shikoto said.

The recently-enacted Banking Institutions Act provides a legal framework for the regulation of banking fees and charges.

Specifically, the act grants the minister of finance and public enterprises the authority to make regulations concerning fees and charges imposed by banking institutions.

The Namibian understands that the BoN last year submitted a report recommending a way forward for bank charges to the ministry. However, the report was sent back for further consideration.

The parliamentary standing committee on economics and public administration recently urged the government to approve and implement clear regulations to oversee bank charges.

Committee chairperson Natangwe Ithete has said there is no clear regulation on bank charges, despite the finance minister being mandated under the Payment Management System Act and the Banking Institutions Act to regulate and prescribe maximum bank charges.

Ithete calls for urgent amendments to the Bank of Namibia Act to strengthen regulatory oversight of bank charges and enhance consumer protection.

“The BoN has mechanisms in place for banks to justify their charges, yet these charges remain largely set at the discretion of financial institutions, often based on credit history. While some reforms are underway, including the Consumer Protection Policy, amending the Bank of Namibia Act remains critical to ensuring a fair and transparent banking system,” Ithete says.

Meanwhile, the BoN yesterday said it acknowledges the concerns raised by the public regarding banking fees.

The central bank’s spokesperson Kazembire Zemburuka said as the regulator of banking institutions, the BoN has a duty to ensure that fees and charges payable by customers for banking services are fair, transparent and aligned with the actual cost of providing these services.

“In line with international best practices, these regulations will be developed in consultation with the banking industry to ensure that financial stability is not compromised while addressing these concerns.

Discussions between the Ministry of Finance [and Public Enterprises] and the BoN are currently ongoing in this regard,” Zemburuka said.

He said the BoN and the Namibia Financial Institutions Supervisory Authority have commenced a thorough investigation to evaluate the fees and charges within the banking and non-banking sectors, including cross-country comparisons, and an analysis of the regulatory and policy implications currently impacting fees.

“The objective of this research is to formulate additional evidence-based recommendations for the finance minister,” Zemburuka said.

Meanwhile, for the long-term approach, the central bank is spearheading the Instant Payment Project, an initiative aimed at reducing transaction costs and improving accessibility to financial services for all Namibians, particularly those in rural and informal sectors.

Zemburuka said the project will introduce an efficient, low-cost and fully interoperable digital payment system, ensuring customers have access to a range of affordable banking solutions.

“Since the infrastructure is being fully funded by the central bank, transaction costs are expected to be lowered across payment streams as evidenced in countries where a similar solution has been adopted,” Zemburuka said.