Banks Mount Major Defence

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By Mbatjiua Ngavirue WINDHOEK Namibian banks have defended themselves against a growing tide of criticism about high bank charges, excessive profits, poor service and failing to provide banking services to large sections of the population. The industry tried to answer these charges at a public hearing held by the Parliamentary Standing Committee on Economics, Natural Resources and Public Resources yesterday. The committee, chaired by Member of Parliament Hage Geingob, was tasked by parliament to examine excessive bank charges and banking regulations in response to a motion tabled by Kalla Gertze of the Congress of Democrats (CoD) earlier this year. The committee called the Bankers Association to testify at public hearings prior to drawing up its final conclusions before reporting back to the full house. Geingob said the hearings were a dialogue that needed to be held in Namibia to establish whether or not the banks really serve all the country’s people. He also raised the accusation of racial discrimination made against the banks, with charges being made that all customers are not treated equally. President of the Banker’s Association Leonard Haynes conceded the banks did not serve the Namibian population equally, but said this was not because of a lack of will. The banks, he said, made huge strides in bringing banking services to the unbanked section of the population. They have now for example introduced satellite technology that allows them to issue fully functioning ATM cards to people in remote rural areas. Haynes said that he could “honestly say” banks do not discriminate on the basis of race at all, adding that they only look at the credit profile of individual clients. Bank charges, Haynes said, was a “competitive issue” because by lowering bank charges an individual bank could attract more clients. They are however tied to the level of interest rates set by the Bank of Namibia, liquidity, solvency, capital adequacy and minimum reserve requirements as well as other factors. Bank charges, he argued, are also linked to the operating efficiency of banks, and if a bank could increase efficiency, he added, it would be able to bring its charges down. DTA committee member McHenry Venaani asked what the profit margins of banks are, strongly criticising the fact that bank profits are kept secret. He said that in the case of a service station, and with many other businesses, profit margins are more or less known but in banking they are secret. Rather than simply telling Venaani what the profit margins are, Haynes gave him a formula for calculating it himself. CoD committee member Kalla Gertze criticised the fact that when people put money into a savings account it erodes rather than grows, which he says does not encourage a culture of saving. He complained that with some accounts there were 20 or more unexplained debits for bank charges a day. This meant by the end of the month bank charges could be as high as N$120, which is a large sum of money if you originally only had N$500 in your account. Gertze questioned whether bank clients actually have any contract with the bank allowing the banks to automatically debit money from their accounts. Johann de Waal of the DTA supported what Gertze said, adding it was not only black customers that complained about high bank charges. He said many people, both black and white, came to him asking why the banks could not offer accounts similar to the old savings books. With the old savings books people could put money into their accounts knowing that the money would still be there, and even grow, after a few months or years. Theo Mberirua of the Banker’s Association said part of the problem was that the banks have never educated customers properly about their services. He said in many cases problems arose because people who want to save money open a transmission account, which is the wrong type of account for saving. The banks, he said, now have tailor-made products coming onto the market for children and the elderly. These accounts will ensure that even if you only put N$50 into your account, not only will you still find it there, but it will also have grown.