The Role of Consultants in Resolving Loan Interest Charges Between Banks and Civil Servants in A Depressed Economy

Abstract

The study is aimed at providing advisory services to both banks and consumer loan beneficiaries on the need to engage financial consultants in appraising loan documents before consummation with a view to resolving disputes that may arise from interest charges computations. This research is necessitated by the growing number of complaints both by banks of loan beneficiaries’ unwillingness to pay accrued interest on one hand and the constant complains of borrowers of excess bank charges on their facilities.  The methodology adopted for this research work was the case study approach in that after a general overview of the situation, case study of a cooperative society with a consumer credit facility with one of the Deposit Money Banks was selected for in depth analysis using secondary data made available by the bank, the cooperative society and documents from regulatory bodies. Findings indicate that both parties are causative agents of excess charges.  Most borrowers do not stick to their repayment plans, given room for the introduction of new charges known as default and penalty fess.  Banks on the other hand uses this opportunity of delay or skipped installment payments to introduce various forms of charges at cut throat rates far above regulated rates in some cases and multiple rates and non-existing charges at other times. In conclusion, the issue of excess bank charges is real, a popular case attracting national and global attention at the court of appeal is the ongoing dispute between Innoson Motors vs Guaranty Trust Bank Plc, Based on this, it is recommended that banks should play by the rules as set out by the regulatory bodies and borrowers should engage consultants for professional advice before committing themselves in addition to complying with repayment plans to avoid undue conflicts.

Keyswords: loan Interest charges, banks, civil servants, consultants, depressed economy