"The issue of charging interest rate by the Banks is always at the heart of every controversy relating to overdrafts and loans. In the case of UBN PLC VS. AJABULE (2011) LPELR-8239 (SC), Adekeye, JSC held that:
"Section 15 of the Bank Act, 1969 mandates all licensed banks to charge interest rates on advances, loans, credit facilities or deposits in accordance with the Central Bank of Nigeria Guidelines on minimum and maximum rates of interest. Where the terms of the agreement between the bank and the customer are clear with regard to the agreed rate of interest and there is no provision for variations, the Bank cannot vary the agreed interest rate of accord with the Guidelines of the Central Bank on interest rate.
The law will always frown at any arbitrary charges by banks on the account of their customers."
In the case of EKONDO COMMUNITY BANK LTD. VS. ANIETING (2013) LPELR-21139 (CA). This Court elaborated on this vexing issue as follows:
"In law, a bank or other financial institution has the right to charge interest on loans or overdraft facilities granted or given to a customer at the rate fixed by the CBN, trade or agreed by the parties to the facilities. See AGBABIAKA VS. FBN PLC (2006) ALL FWLR (326) 253; A. T. (NIG.) LTD. VS. UBN PLC (2010) 1 NWLR (1175) 360; HABIB BANK LTD. VS. GIFTS UNIQUE NIG. LTD. (2005) ALL FWLR (241) 234 @ 257; EDILCO NIG. LTD. VS. UBA PLC (2000) FWLR (21) 792. However, where a facility is granted to a customer and by agreement, the interest rate to be charged was fixed for the facility, a bank or financial institution has no right to unilaterally change, vary or after the rate of the interest to be charged on the facility without consultation and/or consent of the customer. See NBN LTD. VS. ARISON TRADE & ENGINEERING CO. LTD. (2006) ALL FWLR (326) 377; UBN LTD. VS. SAX NIG. LTD. (1991) 7 NWLR (207) 227; UBN LTD. VS. OZIGI (1991) 2 NWLR (PT. 176) 677; ADIBI VS. FBN LTD. (1986) 2 CA (PT. 11) 247; SJ MASKIN VS. OLAOGUN ENT. (1999) 10 - 12 SC 46.
The bank is bound by the interest rate agreed to with the customer and cannot change a rate different from the one
contained in their agreement without the consent or at least knowledge of the customer. Where however the Bank notifies a customer of its change or intention to change the interest rate fixed by their agreement and the customer did not react or object to the change, he would be deemed to have accepted and consented to the change by conduct. See ISHOLA VS. SGB LTD. (1997) 2 NWLR (488) 405.
There must be evidence by the Bank that the customer was duly notified or informed of the unilateral change of the rate of interest and the absence of his reaction or objection to it before such a new rate of interest can legitimately be charged on the facility by the bank. See CONSTRUCTION IND. LTD. VS. BANK OF THE NORTH (1968) NLCR, 81; BARCLAYS BANK VS. HASSAN (1961) ALL NLR, 836; BANK OF THE NORTH VS. ONIYO (2002) FWLR (129) 1492 @ 1507; OKOLO VS. UBN LTD. (1998) 2 NWLR (539) 618". Per Garba, JCA (Pp. 17-18, paras. E-G).
The law is therefore settled that inasmuch as banks in Nigeria have the right and authority to lend out and charge interests, the law does not grant them the latitude to charge interest arbitrarily. The rate of interest to be charged must accord with the rate the Central Bank of Nigeria sets. When there is any need or situation that requires a change of the interest already charged, the Bank must get back to the customer and let the customer know why interest rate earlier charged for the facility need to be changed and must be certain as to the new rate. The issue is very direct and simple. Every loan or overdraft facility is always a subject of agreement between the parties. In issues of agreement the parties must be ad idem and this is what qualifies it to be called an agreement.?
Since issue of charging of interest rate is statutory, the customer at the end of the day may not be able to stop the bank from topping up or reducing (which is very unlikely in our clime) the rate of interest in line with the monetary policy of the Central Bank of Nigeria, but it is significantly fundamental that before an existing interest rate is altered, there must be in the original agreement of the parties a clause that clearly specifies that interest rate could change during the tenure of the facility and the customer must be duly informed. Where there is no clause on the agreement of the parties to make room for variation of interest rate, the bank cannot introduce it unilaterally or arbitrarily as it will be tantamount to shifting the post after the game has commenced.
In the instant case part of the cause of action of the Appellant is that the Defendant was changing the interest rate originally agreed to be 18% to as high as 28% over and above the Central Bank of Nigeria rate of 21% at the relevant period. The Respondent who is laying claim to that varied interest rate and not the Appellant had the duty to prove concisely how it came by the interest chargeable on the overdraft it advanced to the Appellant. See also the case of OLADEMO VS. LAGOS BUILDING INVESTMENT CO. LTD. (2010) LPELR-4735 (CA) where Galinje, JCA (as he then was) held:
"While this Court recognizes the right of money lenders and banking institutions to recover their accumulated interest charges as part of the debt due to them by debtor customers, such interest rates must be publicly displayed to their customers and when the need arise, must be proved strictly. See NIGERIAN MERCHANT BANK PLC VS. AIYEDUN INVESTMENT LTD. (1998) 2 NWLR (PT. 537) 221; UBN LTD. VS. OZIGI (1991) 2 NWLR (PT. 176) 677. In FBN PLC VS. UWADA (2003) 2 NWLR (PT. 805) 485, where the Appellant contended that it had a right under a written agreement to charge interest on the overdraft, but failed to produce in evidence the instrument which it claimed evidenced the transaction, and the rates chargeable within the period, this Court, per Oduyemi JCA held: -"Section 15
of the Banking Act which came into operation on 7th February, 1969 mandates all licensed Banks to charge as the rate of interest on advances, loans, credit facilities or paid on deposits only rates linked to minimum rediscount rate of the Central Bank subject to stated minimum and maximum rates of interest which were approved shall be the same for all banks subject to the proviso in Sub-section (1) This is what is commonly called the Central Bank Guidelines.... It is clear that not only had the Appellant failed to show that it had a right to charge the interest which it charged on the overdraft; it is obvious that whatever rate was being charged by the Appellant on the overdraft has not been linked to the Central Bank Guidelines rate of interest as required by law. The charge of interest was therefore unlawful."
In the instant case, the Court below held at page 252 of the record that there is no evidence before the Court to know the terms and conditions governing the legal mortgage while the Claimant said it was 18% the Defendant said it was 22%. The Lower Court before coming to that conclusion did not advert its mind to the letter of the respondent to the Appellants approving the overdraft which was admitted as Exhibit A and the letter of approval of limits at page 68 of the record. There it is indicated that the interest rate charged for the overdraft is 18%. The Appellant have been able to show that the interest rate charged for the overdraft facility is 18%. The Respondent who is talking of 22% or 28% is the one who has not established how she came about charging the rate. The direct legal mortgage which is supposed to be the main contract agreement of the parties was not tendered by the respondent. What this means
is that having regard to the state of our law which requires that anyone who asserts must prove his assertion on the balance of probabilities in a civil claim the Appellant had established as required that the interest rate was 18% this cannot cause any confusion mentioned by the trial Court.
That 18% interest rate as established is what should govern the parties. Where there is any change of interest rate, the Respondent making the change ought to justify it as to why the change and as to whether the Appellant customer was party to it or informed of it.
"Per ADAH, J.C.A. AKPAN v. FIRST BANK CITATION: (2018) LPELR-44340(CA)
