Central Bank Restricts ATM Withdrawal Fees to Twenty-five Cents
In September, we told you about plans by the Central Bank of Belize to streamline fees charged by commercial banks to address customer concerns over high transaction fees. Well, today Central Bank Governor, Kareem Michael, announced that the Central Bank has taken action to address certain conditions that do not promote the fundamentals of an inclusive financial system. He said that one such measure is the issuance of a practice direction to domestic banks, which imposes restrictions on fees charged by banks. The ATM withdrawal fee is now restricted to a twenty-five cents cost, effective January second 2024. It’s not something that banks were willing to accept so easily and so today, we asked Michael if there is the anticipation that banks would increase fees in other areas to make up for the millions of dollars they will lose annually.
Kareem Michael
Kareem Michael, Governor, Central Bank of Belize
“All banks must reduce or limit ATM withdrawal fees to a maximum of 25 cents per transaction. The banks have also committed to reviewing these fees over the next 12 months. This is sort of a transition period with the aim of reducing them further or applying thresholds based on the level of activity and type of customers in the system. I’ll be as transparent as I possibly can. The end objective of the Central Bank is to have this as zero for own network, own account usage. Now if a customer wants to go and use a network or an ATM that he does not or she does not bank with, charges, I think it is within reason, the Central Bank believes it’s within reason for charges to apply then.”
Hipolito Novelo
“In terms of, you mentioned that there were high level discussions with the association. In terms of individual banks, from the onset, were there any significant push back to these fees?”
Kareem Michael
“Boy, that don’t want, don’t want. I don’t know, I think I should write a book on how this happened. Yes and no. There were moments which immediately after our first meeting that we could get this done and then others which I, I thought that we couldn’t. And I’ll leave my response there.”
Hipolito Novelo
“Were there any considerations given to how this would affect the banking sector or if this would lead to the reduction of ATM services across the country?”
Kareem Michael
“That one I don’t quite understand. I think the case or justification for that is weak. And I, please don’t let me say more on it. Let me stop.”
Hipolito Novelo
“As was mentioned earlier, you know, banks are there to make money. Could then they look at other areas where they would increase fees?”
Kareem Michael
“Yeah, that’s, that’s one of the things I had commented before and maybe my, my choice of words was, was strong. Every time you try to put in a ceiling or a floor or a restriction in a market that is supposed to be driven by competition, you will have, or it’s likely that you have negative consequences. Again, the mandate of commercial banks are solely to it’s shareholder and that’s a profit driven mandate. That is a concern for us that it may be passed on. But look at the fees which we targeted. It is largely speaking to a vulnerable, marginalized segment. Uh, for every withdrawal, if you add, if you make four withdrawals for a month, that’s the one loaf of bread. That’s, that’s pretty harsh. So, these things we have to take into our context. What we have implemented certainly will not bring any bank to its knees.”
Hipolito Novelo
“Is it common practice for the regulators to legislate these kind of fees?
Kareem Michael
“A practice in terms of locally, no, this, this will be a first for the country.”
