The House of Representatives takes action against commercial banks’ improper deductions.

The House of Representatives is taking action to protect Nigerian bank clients from the increasing threat of fraudulent, unapproved deductions by commercial banks.

This comes after a “Bill for an Act to amend the Banking and Other Financial Institutions Act 2020 and for Other Related Matters” was read a second time.

The bill, led by Hon. Moses Fayinka, who represents Lagos State’s Mushin II Federal Constituency, aims to stop commercial banks from deducting fraudulently from their clients’ accounts, a rising problem.

Fayinka, who spearheaded the discussion, presented a sobering image of the rise in financial crime. According to him, the Nigerian banking sector documented an astounding 101,801 instances of illegal deductions in 2022, and 48,703 of the same in 2023. Even though the population is declining, the effect on people and organizations continue to be significant, as seen by the mysterious disappearance of billions of naira from consumer accounts.

“Bank fraud and unauthorized withdrawal of deposit funds are on the rise in Nigeria,” Fayinka emphasized. He maintained that numerous fraudulent actions are able to evade the commercial banking system, making the issue systemic. The rise in financial crimes in the nation, many of which go through financial institutions or the commercial banking system, is the reason behind this bill.

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This endeavor is consistent with Nigeria’s overarching policy goal of purifying the financial system. Customer confidence has declined as instances of cyber fraud and illegal withdrawals have increased, with victims commonly complaining about banks’ tardy or nonexistent reactions when contesting fictitious deductions.

Although the bill intends to curb immediate fraudulent activities, experts think it may also mark the start of more extensive reforms. The banking sector has long been criticized by consumer advocacy groups for its weak internal security and lack of transparency. Customers’ annoyance has only increased due to problems including unapproved fees, hidden costs, and delayed reversal of incorrect debits.

At this point in the parliamentary process, the Bill has passed its second reading. It will be referred to the Senate for agreement and then to the President for assent if it passes the third reading.

Given the huge stakes involved, industry stakeholders and financial experts will be keenly monitoring this legislation’s progress. If passed, it might bring forth new levels of responsibility that force banks to put the safety of their clients’ money ahead of their own financial interests.

Nigerians are currently keeping a cautiously optimistic eye on this legislative action in the hopes that it will signal a sea change in the battle against dishonest financial practices. The money in your account will remain yours if the amendment is passed into law, which could help rebuild some of the public’s confidence in the financial system.