Dear Editor,
I did not realize that changing a cheque was such an intricate and costly financial transaction. Last month I gave to someone a government cheque (drawn to me) to the value of $2550 as part payment of a four thousand dollar ($4000.) bill for services rendered. The fellow, a resident of Beterverwagting accepted the cheque intending to change it the following day when he would have travelled to Georgetown. Two days after he related a rather sordid tale, which I would précis thus: –
The cheque remained unchanged because
1. the first bank would not change a government (Bank of Guyana) cheque
2. the second bank would change the government cheque but imposed a $1000 fee.
He did not try a third bank, because he had already lost over one hour attempting to recover the $2550.00.
Last week, I was able to verify the second bank’s view, which I understand is more or less universally applied within the industry. I approached a bank’s teller with a third party cheque, and she promptly told me that it attracts a $1000 service charge. I asked her why? She said it was the bank’s policy regarding third party transactions.
She changed the cheque and gave me the stated sum less $1000. At this point I asked her for a receipt to account for the paid money.
After some convincing, she gave me an unnumbered document (with no duplicate) which simply stated “Charges took for a third party withdrawal. ($1000) one thousand dollars”. At this point in time I asked her if she received the money from her neighbour or the person standing in front of her. She got my draft and wrote my name on the document.
On querying the absence of revenue stamp/s on the receipt she said it has the bank stamp. I am not schooled in the regulations under which banks operate, but I consider that there is some misapplication of these regulations in the enforcement of this third party fee. The exercise I witnessed and was subjected to suggests that these third party transactions are evidenced by no receipts, no stamp duty, etc.
In discussion with the teller I asked what would have been the charges if I had deposited the money into my account and withdrew every cent immediately, she said then the charge would not have applied. That seems inconsistent for she would have executed much more effort to complete my transaction for no charges but for doing less the charge existed. Not everyone who may enter the doors of a particular bank with a third party cheque would have an account at that bank and not every one would ask for a receipt – though there is no duplicate in the bank for the one I got. This is an anomaly “less service/work more cost, more service/work no cost”.
In effect, what we have is institutional flouting of the regulations governing the applications of stamp duty in business transactions. Small businesses must respect these regulations, while big business in the form of banks have been showing total disregard for these, hence disregard for the laws of the country.
This attitude by banks says to me that they are anti-society, and anti-poverty reduction. I take this line primarily in the instance of the government cheque which the first bank did not honour. If this institution cannot honour a BOG cheque, then it is saying that it does not have confidence in this society. Someone ought to explain how then the Bank of Guyana keeps renewing its licence to operate, when it is showing such disrespect for this society and the industry’s regulating body.
It is accepted that agencies and persons with liquidity would deposit cheques whether their own or third party documents, while for those with a liquidity problem, the poor, it is highly probable they would choose to encash cheques that come their way. These are the people that would eventually pay the $1000.00 service charge, and include many of the single parent mothers working in security organisations. Such women because of other commitments often times ask colleagues to cash their wage/salary cheques, thus paying for a service which the drawer(s) would have paid the bank for already. It boggles the mind to understand why this additional charge for the service does not involve other operational activities than encashing a first party cheque.
More and more employers are moving away from cash payments, choosing to issue cheques. Thus if this seemingly unfair charge continues to be instituted, one can see players in the local banking industry making windfall profits, as our economy tries to catch up with the rest of the world, with regard to use of instruments other than cash for business transactions.
I have had the privilege of looking at the audited accounts of two banks, and had the devil’s job of establishing where they placed the income accrued from third party withdrawals. It is an area the Bank of Guyana and Guyana Revenue Authority should attempt to investigate, in the first instance, as to whether it is covered by any regulation and if so whether it is properly accounted for and taxed (including stamp duty). In retrospect I wonder if the fellow had accepted the proposal to pay the $1000 fee I may not have been supportive to refund that money – definitely a situation for potential conflict.
Yours faithfully,
Elton McRae
