Tag: cbn

The Central Bank of Nigeria (CBN) yesterday said it is working out regulatory framework that would enable it to either blacklist fraudulent bank customers, or at least, place them on watch-list across the banking industry.

CBN Director, Banking and Payment Systems Department, ‘Dipo Fatokun who disclosed this at the Finance Correspondents Association of Nigeria (FICAN) Bi-Monthly Forum hosted by the apex bank in Lagos, said such feat can only be achieved with the help of the Bank Verification Number (BVN).

He explained that the BVN involves capturing of customers’ physiological or behavioral attributes – fingerprint, signature among others which is coordinated by the CBN and banks in collaboration with the Nigeria Interbank Settlement System (NIBSS).

Data from the CBN showed that although e-fraud rate in terms of value dropped by 63 per cent last year, after the BVN introduction and improved collaboration among banks via the fraud desks, the total fraud volume rose significantly by 683 per cent within the year compared to 2014 figures.

Also, the country experienced a total of 3,500 cyber-attacks with 70 per cent success rate and loss of $450 million within the last one year mainly through cross channel fraud, data theft, email spooling, phishing, shoulder surfing and underground websites.

Fatokun explained that before the coming of the BVN, identifications previously used in the banking industry were not foolproof and fraud perpetrators can easily escape with the funds untraced.

However, BVN has now made it easier for the CBN and banks to uniquely identify every customer or to be able to trace transactions when frauds are committed. He explained that no bank customer, including Nigerian bank customers in Diaspora, is authorised to have more than one BVN.

“I want to assure you that the BVN has assisted us a lot in the banking system. It has assisted us to check frauds, and we are working on a framework, that will enable us if not to blacklist customers, because of some legal implications, but at least to watch-list a customer that is identified to have been fraudulent, or have done what he is not supposed to do across the banking sector,” he said.

Fatokun, who spoke on the theme: ‘Recent Developments in the Electronic Payments System and Implications for Consumers of Electronic Payment Services’ said the CBN has been at the forefront of the transformation of the payments system in the country which has been demonstrated through the development of the Payments System Vision (PSV) 2020 document in 2007, which was reviewed in 2013.

He said the PSV 2020 strategy is aimed at providing a roadmap for efficient payments system infrastructure that would be nationally utilized and internationally recognized.

“The payments system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other. In setting out the objectives of the National Payments System (NPS), the goal is to ensure that the system is available without interruption, meet as far as possible, all users’ needs, and operate at minimum risk and reasonable cost,” he said.

He said The BVN project is jointly undertaken by the CBN in collaboration with the Bankers Committee and remains a strategy of ensuring effectiveness of Know Your Customer (KYC) principles. “Each Bank customer is given a unique identity across the Nigerian Banking Industry, including Nigeria bank customers in Diaspora,” he said.

The CBN Director said the number of BVN linked to customers’ accounts as at August 23, this year was 36.7 million while the total number of individual customers in the banks was reported as 59.9 million as at the same date.

“Any bank customer resident in Nigeria without a BVN would be deemed to have inadequate KYC while effort is on-going to ensure that customers of Other Financial Institutions (OFIs) such as Microfinance Banks (MFBs) & Primary Mortgage Institutions (PMIs) are brought into the system begin to get their BVNs,” he said.

Fatokun said the e-Payment remains an initiative of CBN under the Payments System Vision 2020 as part of the overall FSS 2020 Strategy adding that one of the CBN mandates is the promotion of a sound financial system (Section 2 (d) of the CBN Act 2007).

He disclosed that Section 47(2) of the CBN Act 2007, stipulates that the CBN shall continue to promote and facilitate the development of efficient and effective systems for the settlement of transactions, including the development of electronic payment systems, adding that the promotion of a sound financial system entails active support for the effectiveness, efficiency and systemic safety of the payments system.

•Foreigners can now invest in T-Bills, commercial papers

Non-Nigerians are now free to invest in short-term debts and securities.

The Central Bank of Nigeria (CBN) yesterday rolled out new foreign investment inflow guidelines targeted at portfolio investors.

The guidelines, announced by CBN Acting Director, Trade and Exchange Department, W.D. Gotring, throws the field open to foreigners to invest in Treasury Bills (T-Bills), Federal Government Bonds, certificates of deposit, commercial paper, bankers’ acceptances, and repurchase agreements.

These instruments have maturities ranging from one day to one year and are extremely liquid.

The CBN acting director, however, stated that only funds that came in through authorised dealer by resident/non-resident Nigerian nationals and companies specifically for the purpose of investment would be eligible for the transactions.

Consequently, balances on exports domiciliary and ordinary domiciliary accounts shall not be eligible for investment.

Reacting, Head of Treasury at Ecobank Nigeria, Olakunle Ezun, said the announcement, was in line with CBN’s renewed drive to attract more dollar inflows into the economy, in the face of continued dollar scarcity which yesterday, pushed the naira to all-time low of N425 to dollar in the parallel market. He described the policy as a welcome development.

CBN’s devaluation of the naira in June when the flexible foreign exchange policy was announced was meant to provide the much desired stimulus and foreign portfolio investment needed to boost investments in the capital market.

Gotring in a circular entitled: Portfolio investment in Nigeria Re: Amendment of Memorandum 21 of the Foreign Exchange Manual, sighted by The Nation, admitted that the new guidelines were aimed at encouraging portfolio investment into the country.

“In the continued effort to encourage portfolio investment in Nigeria, Resident National and/ or companies who in flowed foreign currency through an authorised dealer (commercial bank) are henceforth allowed to invest such funds in a money market instruments, bonds and equities,” he said.

Accordingly, the amendment of the provision of Memorandum 21 of the Foreign Exchange Manual, says  : “A resident/ non-resident Nigerian national and /or entities and foreign national entity may invest in Nigeria by way of purchase of money market instruments such as commercial papers, Negotiable Certificates of Deposits, Bankers Acceptances, Treasury Bills, among others subject to the meeting specified documentation requirements”.

He said that such investor should however provide tested Society for Worldwide Interbank Financial Telecommunication (SWIFT message) to allow financial and non-financial institutions to transfer financial transactions through a ‘financial message’.

The SWIFT message, he said, should show the remittance of funds; board resolution of the local beneficiary authorizing the investment (in the case of company); purpose of capital importation specified in the SWIFT message and evidence of incorporation where applicable.

The CBN also defined the procedure for resident/non-resident Nigerian nationals and companies investing in portfolio investment, which include that prospective investors appoint a local bank or broker as an agent to purchase the instruments.

Besides, the funds for the investment should be transferred electronically to a designated bank while on receipt of the funds, the bank should issue the investor with certificate of capital importation within 24 hours.

According to Gotring, authorised dealer shall keep separate records of the investment and render returns to the apex bank in format that will be advised from time to time.

“With the certificate, the investor through the bank or broker enters the market; invests in any instrument of his choice. If at any point in time the investors want to divest, he shall go back to the bank with Certificate of Importation and evidence of redemption of the money market instrument,” Gotring said.

Analysts believe that the money market is important for businesses as it allows companies with a temporary cash surplus to invest in short-term securities; conversely, companies with a temporary cash shortfall can sell securities or borrow funds on a short-term basis. In essence the market acts as a repository for short-term funds.

The suppliers of funds for money market instruments are institutions and individuals with a preference for the highest liquidity and the lowest risk.

The figures on the Nigeria Stock Exchange’s domestic & foreign portfolio report released in March 30, showed that foreign portfolio investment outflows rose by 108.2 per cent to N58.2 billion ($292.32 million) from N27.95 billion (140.4 million) between January and February this year.

Several foreign companies that were for years, drawn to Nigeria by the prospect of a population and other issues are now exiting the economy as they struggle to secure the needed foreign exchange for their businesses. The devaluation and reversal of the short-term instrument investment guidelines were meant to bring back the exited investors.