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Recovery of interest by banks: a critical examination of Nigerian case law

Published online by Cambridge University Press:  28 July 2009

Olawale Ajai
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Extract

It is well settled that interest is chargeable only where an agreement expressly or impliedly so stipulates, where statute so provides, or where a mercantile custom to that effect exists. Recovery of interest by banks developed from mercantile customs. These were designed in such a way as to avoid the usury laws which initially outlawed usury but then subsequently allowed interest up to a rate of 10 per cent at the most liberal period before the English Usury Laws Repeal Act of 1854 swept away all restrictions on money lending. Lord Macmillan gave the following account of the recovery of compound interest in Paton v. Inland Revenue Commissioners:

Type
Articles
Information
Journal of African Law , Volume 41 , Issue 1 , Spring 1997 , pp. 109 - 117
Copyright
Copyright © School of Oriental and African Studies 1997

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References

1 See Aguda, J., in National Bank of Nig.Ltd v. Ologun (1976) N.C.L.R. 237, 241.Google Scholar Also see Umezinwa, J. in Okorafor v. Jupueze (1974) N.C.L.R. 340, 356.Google Scholar

2 See generally, Thompson, , Recovery of Interest: Practice and Precedents, London, 1–3.Google Scholar

3 [1938] A.C. 341.

4 (1971) (1) N.C.L.R. 180.

5 (1967) (1) N.C.L.R. 427.

6 (1977) (1) N.S.C.C. 415.

7 At 196.

8 (1979) (1) N.C.L.R. 263.

9 [1990] 1 C.C.H.CJ. (Pt. 1) 126.

10 Ozigi v. Union Bank of Nigeria Ltd [1990] 8 W.B.R.N. 122 at 142.Google Scholar

11 [1967] 1 A.L.R. Comm. 209.

12 [1993] 1 N.W.L.R. (Pt. 271) 586.

13 [1991] 7 N.W.L.R. (Pt. 202) 228.

14 No. 25 of 1991. S. 23(1) of that Decree now merely provides thus: “Every Bank shall display at its offices its lending and deposit interest rates and shall render to the Bank information on such rates as may be specified from time to time”.

15 See e.g. para. 10 of the Monetary and Credit Policy Guidelines for 1992 Fiscal Year. See also Tony Ndialor, “No plans to peg interest rates, say CBN”, The Guardian, 7 January, 1993, at 24.

16 Above, n. 10.

17 Suit NO. KWS/100/88 delivered on 23 November, 1988 (High Court of Kwara State, Ilorin Judicial Division).

18 No. 1 of 1969.

19 At 141 following Afolabi v. Governor of Oyo State [1990] 9 S.C. 177 per Obaseki. J. S.C., at 128.

20 See Union Bank of Nigeria v. Ozigi (1991) 2 N.W.L.R. 677.Google Scholar

21 At 695.

22 At 235.

23 [1989] 1 All E.R. 918.

24 [1994] 3 N.W.L.R. (Pt. 333) 385.

25 These are generally cases involving private individuals borrowing for non-business purposes. See generally s. 32 of the Consumer Protection Council Decree No. 66 of 1992.