What's the total loss due coin shortage at banks

 By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

17 June 2012

Steve (second name withheld) was at the bank recently and he witnessed an exchange between the teller and a customer. The issue was that the customer had been short-changed by 30 cents and she didn’t take it kindly.

The teller was at pains trying to explain that he didn’t have the necessary coins to pay out the full amount. Now we’ve heard of coin shortages at supermarkets and other shops, but not at a bank? That’s a new one! And Steve would like fellow readers of this column to know that the cumulative “theft” through such excuses is colossal.

Indeed it is. According to the Central Bank of Kenya, there are 43 licensed banks in the country and they have a combined total of 1,065 branches. If just one teller in each branch stole 30 cents from a customer every hour, how much would be stolen in total in one year?

Most banks open at 9am and close at 3pm, from Monday to Friday. This is a duration of six hours. Therefore they are open for 30 hours in one week; this works to 1,560 hours in a year (52 weeks).

Thus each teller would steal Sh468 per year (30 cents multiplied by 1,560 hours) and the combined total for all of them comes to Sh498,420 (Sh468 time 1,065 branches).

Of course, 30cents to an individual customer is a small amount of money and most people wouldn’t make noise about it. However, when accumulated over all bank branches, it comes to almost half a million shillings!

Now let’s look at the situation differently: what if the teller decided to take in the loss by paying 50 cents instead of 30 cents? The loss this time is 20 cents per transaction. This works to Sh1.20 per day per teller or about Sh70 per month (assuming about 4.3 working weeks per month). Would that be too much to ask of a teller?

Well, the answer depends mainly on the teller’s attitude (towards customers and employer) and to smaller extent on his or her salary. Whatever the case, it would be easy for a bank to put a policy of reimbursing the money lost without the need for documentary proof – it is smaller enough to be accounted for through petty cash.

The bank with the largest network has 165 branches; therefore, for them, the total loss comes to Sh11,550 per month or Sh138,600 per year. Now that sounds like it’s a lot but when you consider that this bank returned an operating income (not profit!) of over 28 billion shillings, that picture changes immediately.

But the bank may also argue that, as matter of principle, it doesn’t want to carry the loss. Thus we end up at a stalemate with customers unwilling to lose Sh498,420 and banks not giving up Sh332,280! Well, not quite: the customer is most likely to give in and walk away with anger and 30 cents short.

So the final question is: who loses more? Is it the customer who gives up 30 cents or the bank that left with an unhappy client?