The Nation Newspaper

Tag: cbn

  • CBN orders banks to build buffers against bad loans

    CBN orders banks to build buffers against bad loans

    •Banks’ credit with CBN hits N622b

    The Central Bank of Nigeria (CBN) has ordered deposit money banks to double provisions on performing loans to two per cent to build adequate buffers against unexpected losses.

    General provisions on performing loans had been fixed at one per cent before the new regulation, said the CBN circular which came into effect last week.

    “In recent times, the adverse macro-economic environment has been a source of concern in the financial sector,” the bank said.

    Meanwhile, the interbank lending rate held steady for the second consecutive week at 0.5 per cent after the CBN injected matured Open Market Operation (OMO) bills into the system, traders said.

    Banks’ credit balance with the CBN opened at N622 billion ($3.13 billion) on Friday, compared with a surplus of about N514 billion last week.

    The secured open buy-back (OBB) – the rate at which lenders can borrow from the interbank market using treasury bills as collateral – held steady at 0.5 per cent same level last week, far below the CBN’s 13 per cent benchmark interest rate.

    Traders said about N179 billion in matured OMO bills was injected into the system on Thursday. They also expected an unspecified amount of refunds from cash that banks had deposited with the central bank for forex purchases to hit the banking system on Friday.

    Traders said although about N70 billion for bond purchases and N18 billion debited for cash reserve requirements left the system on Friday, the market remained substantially liquid.

    “The market is highly liquid and we are not seeing any change in the lending rate at the interbank market in the near term unless the central bank resumes the issuance of OMO bills as is being speculated in the market,” one dealer said.

    A few commercial lenders were transacting overnight placements at one per cent on Friday, the same level last week, but most are still insisting on secured lending, traders said. “We expect the system to remain liquid next week and interbank rate trading at the prevailing level,” another trader told Reuters.

     

  • CBN’s new rule book

    CBN’s new rule book

    •What matters most is not the rule, but its enforcement

    Last week, the media reported a set of fresh-mint regulations being proposed by the apex bank to protect bank customers from exploitation by banks. The draft regulations, said to be currently under consideration by the stakeholders, is as detailed and comprehensive as it could be –a rule book– a rather ambitious attempt to re-order and or erect a new operational and ethical foundation for the industry.

    Among many, it starts with the broad goal for the Central Bank of Nigeria (CBN) – which is to “ensure that operators (banks) establish structures to prohibit predatory lending and hence support a positive credit culture in the industry”; for financial operators, it spells out its role in “credit counselling to prevent consumers’ indebtedness due to limited financial knowledge” as well as disseminate information on the existence of the services while also encouraging them to take advantage of them. It also wants lenders to “provide detailed information on the terms and conditions of a loan agreement to consumers prior to executing the loan agreement”. This must include the “pricing, repayment schedule, repayment amount, tenure and opt out options”.

    On the thorny issue of loan recovery, whereas the CBN is to set guidelines for ethical debt collection practices in the industry based on “dialogue, respect for the consumers’ privacy and longevity of consumer-operator relationships amongst others”, actual debt recovery processes, the rule prescribes, must be courteous, fair and non-coercive. Moreover, personnel assigned to recover debts are expected to be properly trained while consumers shall be informed in advance before a recovery process is initiated.

    In case of contract variations, operators are expected to give prior notice to consumers within the time specified in contracts, before implementing variations in terms and conditions of contracts. Contractual language, it proposes, must be “precise, clear and unambiguous”. “Information”, in all cases, “must be communicated in plain and simple language to limit the possibility of misinterpretation. Contract documents must be in legible font size. Where technical terms are used, the financial operator shall take due care to ensure that such technical terms are clearly explained to the understanding of the consumer to avoid the occurrence of confusion or miscommunication”.

    To generate increased business volumes or attract new customers, financial operators are mandated to “provide factual information and shall not seek to mislead consumers. Financial operators shall also not take advantage of consumers’ inexperience, gullibility or lack of understanding”.

    These are just a few of the many provisions of the new rules.

    We observe primarily that the rules are not necessarily novel or even different, at least in any fundamental sense, from the well-known conventions that have evolved over the course of the years and which have come to govern the operations in the financial services industry globally. That our practitioners have been carrying on in the absence of a codified body of guiding rules for financial service providers; the very idea that such important rules are only being set out in the form that is being proposed by the apex bank given the state of development in the industry is not only incongruous but unsettling. Indeed, it may well serve to explain a number of the puzzles that have hobbled the industry, factors that have rendered the goal of financial inclusion for majority a non-starter. Need we further ask why consumers of financial products are constantly treated to the short end of the stick; or question the arbitrariness that has characterised relations between service provider and the consumer, not to talk of the brazen criminality that some of these factors have given rise to?

    We must however say that rules are important only to the extent that they are kept. The challenge really is getting the operators to obey them. In other words, the true test of the effectiveness of the rules would come later when practitioners are seen to abide by them. At the moment, we can only say of the proposed regulations: better late than never.

  • Presidency threatens to sanction CBN over Stanbic IBTC

    Presidency threatens to sanction CBN over Stanbic IBTC

    The presidency has threatened to sanction the Central Bank of Nigeria (CBN) if it is discovered that the errors observed in the financial statements of Stanbic IBTC are found to be true.

    This is contained in a letter written on Tuesday 10th November, 2015 by the Financial Reporting Council of Nigeria (FRC) to the CBN governor in reaction to the earlier controversial letter written by the CBN.

    According to the FRC, the Presidency has promised to wield the big stick against the CBN “because the CBN approved the said financial statement before they were issued.”

    The explosive letter from the FRC had indicated that a meeting had been convened by the Chief of Staff to President Muhammadu Buhari, Alhaji Abba Kyari between the CBN governor Mr. Godwin Emefiele and the Executive Secretary of the FRC Mr. Jim Obaze in the presidential villa on the 29th of October, 2015.

    According to the letter, the Chief of Staff had instructed both the CBN and the FRC to come up with a harmonized position as two regulators on the review of the Stanbic IBTC’s financial statement for the years ended 31st December, 2013 and 2014.

    At the end of the meeting, the Chief of Staff directed that the CBN “should write to the management of Stanbic IBTC, directing them to stop all negative publicity being sponsored against the FRC. He directed you (CBN Governor) to send a copy of that letter to me (Jim Obaze of FRC and up Up till now, you are yet to send a copy of that letter to me).

    Abba Kyari also directed that “a team of CBN should visit Stanbic IBTC to review the records again to know whether the errors were due to oversight or incompetence or compromise; that the FRC should secure a written position on the matter from the external auditors of Stanbic IBTC and that the CBN Governor and the FRC Executive Secretary should agree on a date to meet thereafter and review the document received and reach a final decision.”

    The FRC in its letter accused the CBN of acting in bad faith and that the actions of the CBN were designed to embarrass the FRC. Obaze in his letter said the CBN in its letter had cleared Stanbic IBTC and maligned the FRC.

    On the financial issues raised by the CBN, Obazee in his letter to the Emefiele said the CBN “mixed up issues and eventually ended up with very wrong and hasty conclusions.” The FRC said its regulatory decision was for the purchase and assignment of a banking application software request made to NOTAP by Stanbic IBTC on July 3rd 2013 “which is another transaction other than the one the CBN letter addressed.”

    FRC then “wondered why the CBN is condoning and vehemently defending an unwholesome disclosure and reporting practice such as this. The only plausible reason will be that the CBN actually approved these financial statements.”

    Wrong classification of items of assets and liabilities (two of the three major elements of financial statements) the FRC said “could affect the economic decision of users, which implies that: “assets and liabilities figures do not reflect what they actually are and the financial statement misrepresents the true state of the company’s affairs.

    Qualitative characteristics of verifiability and comparability have been compromised; and the financial statements do not actually comply with IFRS.”

    Jim Obazee wrote that the FRC would “make bold to say that we acted within the provisions of the FRC Act, 2011 and the Inspectorate Unit Guidelines/Regulatory 2014. Since, the FRC is neither a department of the CBN nor a reporting agency to the CBN, we do not owe the CBN any explanation in this respect,” the letter concluded.

  • Marketers call for release of N413bn subsidy claim

    Marketers call for release of N413bn subsidy claim

    Some accredited oil subsidy marketers on Thursday said the failure of Federal Government to release the approved N413 billion subsidy debt was disrupting their fuel importation schedule.

    The marketers made their feelings known in an interview with the News Agency of Nigeria (NAN) in Lagos.

    They said that they were concerned that the money had not been released one week after the approval was granted.

    The marketers alleged that the delay was affecting loading activities at depots and had led to the shutting down of some filling stations due to non-availability of petroleum products.

    “Government, through the Central Bank of Nigeria, has not released any subsidy claims as promised.

    “As I am talking to you we have been directed by the CBN to go and meet the Debt Management Office for clarification.

    “All our efforts to get the said money have been in vain and to start importing has been a serious problem.

    “There is no money to back up the cheques presented to the marketers.

    “We do not even know the basis for the clarification of the cheques, but we are aware that there is no money in the account.

    “It is like giving the marketers cheques only to discover that there was no money in the account.

    “Nothing like importing now because all marketers are angry because of the failed promised,” one of the marketers al

    The market said; “If you go outside Lagos you know how much they are selling fuel per litre now, it is the last stock that we are selling now.

    “It is unfortunate that the Department of Petroleum (DPR) is saying that we are hoarding the products, which is not the truth.

    “We have not collected a single coin from the money.

    “If not the fact that some of the marketers are making some money from other products, how do you think we will be able to get anything for now?

    “We have been summoned by DPR for a meeting this morning to settle the crisis, we are only managing what we have in stock at present,” he said.

    NAN recalls that the Federal Government, had on Nov. 3, approved the sum of N413 billion to petroleum products marketers as the outstanding payment for subsidy claims.

  • CBN ‘should give fuel importers access to forex’

    Operators in the downstream sector of the oil and gas  industry have advised  the Central Bank of Nigeria (CBN) to make it easy for importers of petroleum products to  access  foreign exchange (forex) in the short term.

    The advice, is coming on the heels of the Federal Government’s  move to create a transparent market-driven system by publishing fuel prices.

    A communiqué by industry players and stakeholders, at the end of this year’s Oil Trading Logistics (OTL) Africa Downstream Week in Lagos, explained that fuel  subsidy is a disincentive to the supply chain infrastructure investment, market innovation and consumer value. It added that in view of low crude oil prices and naira devaluation, the country could no longer afford to pay  subsidies.

    They urged  the government to remove fuel subsidy and deregulate the downstream sector. Deregulation of the industry will attract appropriate investments, promote optimal efficiency, healthy competition, ensure efficient supply of petroleum products to the country and improve the infrastructures in the downstream sector, the communiqué  added.

    They want local refining of fuel to be prioritised and a deliberate shift initiated from importing products to building refineries. There is a need for a national refining policy, which defines the framework for encouraging investment in petroleum refining in Nigeria to facilitate increased national revenue and infrastructure development, the communiqué  said.

    It noted that in view of the significant number of jobs created by the downstream sector, the private sector should be encouraged to drive the growth of the industry through appropriate policies, while the government should provide the legal framework on which the  sector will be anchored, including the Petroleum Industry Bill (PIB). The PIB needs to be clarified and enacted with a view to ensuring legal certainty and promoting efficiency and competitiveness, it added.

    The communiqué said the downstream expansion of natural gas utilisation, with regulated gas price for domestic sales, governance limitation and institutional deficiency, constitute both a challenge and opportunity for gas supply. To stimulate investment in liquefied petroleum gas (LPG), multiple taxes and high tariffs should be reduced while the development of infrastructure and distribution channels such as local cylinder manufacturing, storage facilities, filling plants, bob-tail trucks, gas pipeline for residential consumption, automobiles and petrochemical plants, should be encouraged to enable the growth of LPG.

    The industry players also called for the removal of subsidy on kerosene to encourage the growth of LPG consumption in Nigeria. Also to encourage the development of the lubricants and base oils market, regulators, operators and consumers need to work together to stop the importation of substandard lubricants as well as the activities of illegal blenders while research and development should be ongoing for production of base oil in Nigeria.

    They stressed the need to have a strong advocacy group to work with the regulatory body, to drive home the point that a good standard of quality of lubricants must be maintained, they added.

    The communiqué read in part: “There is need to commercialise the pipelines by concessioning or outright sale, for an efficient distribution of the products. It is prudent to invest in an oil spill surveillance technology to monitor oil spillage through pipeline vandalism.

    “Oil companies are encouraged to undertake good corporate social responsibility to preserve the communities where they operate and to create a form of investment through job creation; thereby reducing threats of piracy and sea robbery.

    “There is need for government to ensure the roads are fixed and the rail system reactivated either by itself or through Public-Private Partnership (PPP), to enable the trucks move the products safely and promptly to the storage facilities while the rail assists the road networks.

    “Truck drivers should be enjoined to undertake trainings to improve their driving skills, for their safety and safety of the community.”

  • CBN gives customers BVN reprieve

    CBN gives customers BVN reprieve

    Customers yesterday got a breather on the Bank Verification Number (BVN), with the Central Bank of Nigeria (CBN) directing banks to ensure their uninterrupted enrolment on the platform.

    In a statement signed by its Director (Corporate Communications) Ibrahim Mu’azu, the CBN said although the time frame for the initial enrolment had elapsed, the exercise should go on indefinitely.

    The BVN, which captures bank customers’ biometric data, such as  fingerprints, provides unique identification for them and equally protects their accounts from unauthorised access, identity theft and fraud.

    Customers who are yet to register are required to do so to avoid restrictions on their accounts.

    “Account holders who are yet to obtain their BVN are enjoined to visit their banks and do the registration. There are two steps to the BVN process. The first step is to obtain a BVN while the second step requires the account holder to link the BVN with his or her bank account(s),” he said.

    Mu’azu said an individual could enroll for a BVN without necessarily having a bank account. Such individual can then submit the acquired BVN at any bank he/she wishes to open an account.

    He said linking BVN to bank accounts is now a one-stop-shop which enables account holders to register and link their BVN to their accounts in one location, irrespective of the banks in which they have their accounts. All these are aimed at making the process as seamless as possible.

    “The BVN is neither a payment instrument nor an account number and therefore cannot be used to access any account by unauthorised users,” Mu’azu said.

     

  • CBN lists criteria for accessing N220b MSME fund

    CBN lists criteria for accessing N220b MSME fund

    To achieve strong and viable agricultural base, the Central Bank of Nigeria (CBN) has listed conditions for accessing the Anchor Borrowers credit from the N220billion Micro, Small and Medium Enterprises Development Fund (MSMEDF).

    The Anchor Borrowers credit is for farmers at nine percent per annum interest rate to address the challenge of poor funding they face.

    CBN Governor, Godwin Emefiele, stated thus during an interaction with rice farmers in Awka, Anambra State.

    He said the idea behind the Anchor Borrowers programme initiative was to diversify the economy by addressing the issue of local production of agricultural products that reduces the nation’s foreign reserve.

    Emefiele, who was represented by his Special Adviser on Development Finance, Paul Eluhaiwe, identified lack of mechanisation, low quality inputs and poor funding as major hindrances to rice production but stressed that the programme was aimed at solving the problem of finance.

    On the conditions for accessing the loan, the CBN boss said the farmers will be thoroughly trained on the global best agronomical practices.

    According to him: “The farmers must be members of a validated cooperative before applying for the loan.

    “We will find out how much it will take to produce one hectare of rice to determine the amount that will be given to each individual. The idea is to enhance efficient management of the resources.”

    The Managing Director of Ebonyi Agro Nigeria limited and the Major Off-Taker of the programme in Ebonyi, Enugu and Anambra State, Engr. Charlce Ugwu, lamented Nigeria consumes about six metric tons of rice yearly but produces only 3.5 metric tons at about $3 billion.

    He noted that the two paddy aggregation centres in Anambra State will be made more viable, promising that his group will buy all the rice produced in the state through the programme.

    He also enjoined farmers to utilise the opportunity offered by the programme to increase their yield.

    Governor Willie Obiano, represented by the Commissioner for Agriculture, Afam Mbanefo, thanked the CBN and the Offtaker for the initiative and called on the farmers in the value chain to ensure that they are revalidated.

  • Don’t play politics with bailout, PDP govs warn CBN

    Don’t play politics with bailout, PDP govs warn CBN

    Governors elected on the platform of the Peoples Democratic Party (PDP) have warned the Central Bank of Nigeria (CBN) against partisanship in the disbursement of bailout funds to beneficiary states.

    The warning is coming on the heels of allegations by the opposition party that the CBN has become a tool in the hands of the ruling All Progressives Congress (APC)

    A statement on Friday by the coordinator of the PDP Governors Forum, Mr. Osaro Onaiwu, cited the refusal of the apex bank to release the bailout fund allotted to Kogi State.

    The statement said while the CBN did not delay in the disbursement of the funds to beneficiary states under the control of the APC, it has refused to disburse same to Kogi State which is under the control of the PDP.

    The governors lamented that the CBN has allowed itself to be dictated to by the ruling APC, saying that Kogi State had fulfilled all the requirements spelt out by the CBN for the release of the fund.

    “We urge the CBN to insulate itself from politics and the control of the ruling party if it does not want to create political and financial crises in the country.

    “How come almost all APC states that applied for bailout have gotten theirs but states like Kogi that has fulfilled all the requirements has been denied its share with no explanation from the CBN.

    “The CBN Governor, Mr. Godwin Emefiele, has to insulate the apex bank from the shenanigans of politicians to avoid serious political and economic dislocation in the country.

    “It is important and urgent that the CBN releases the N50 billion bailout due Kogi state to ease the suffering of the common people in the state”, the statement added.

  • Bailout: PDP Governors warn CBN against partisanship

    State governors elected on the platform of the Peoples Democratic Party (PDP) have warned the Central Bank of Nigeria (CBN) against partisanship in the disbursement of bailout funds to beneficiary states.

    The warning came on the heels of allegations by the PDP that the CBN has become a tool in the hands of the ruling All Progressives Congress (APC)

    A statement issued on Friday by the coordinator of the PDP Governors’ Forum, Mr. Osaro Onaiwu, cited the refusal of the apex bank to release the bailout fund allotted to Kogi State.

    The statement said while the CBN did not delay in the disbursement of the funds to beneficiary states under the control of the APC, it has refused to disburse same to Kogi State which is under the control of the PDP.

    The governors lamented that the CBN has allowed itself to be dictated to by the ruling APC, saying that Kogi State had fulfilled all the requirements spelt out by the CBN for the release of the fund.

    “We urge the CBN to insulate itself from politics and the control of the ruling party if it does not want to create political and financial crises in the country.

    “How come almost all APC states that applied for bailout have gotten theirs but states like Kogi that has fulfilled all the requirements has been denied its share with no explanation from the CBN.

    “The CBN Governor, Mr. Godwin Emefiele, has to insulate the apex bank from the shenanigans of politicians to avoid serious political and economic dislocation in the country.

    “It is important and urgent that the CBN release the N50 billion bailout due to Kogi State to ease the suffering of the common people in the state,” the statement added.

  • World Savings Day: CBN educates students on savings culture

    The Central Bank of Nigeria (CBN), has emphasised the need for every Nigerians to imbibe the culture of saving so as to have better economy and citizenry.

    Speaking at a World Saving Day programme organised for students of St. Peters Unity Secondary School in Akure, the Ondo State capital, the state branch controller of CBN, Mrs. Adeyemi Yusuf, said there is need for parents and guardians to start training their children on how to save.

    Yusuf noted that CBN has decided to take its enlightenment programme to schools so as to lay a foundation in the minds of the children at their early age.

    According to her, students from14 secondary schools in the six geo-political zones benefited from the mentoring programme.

    Adeyemi said it is only savings that translate to investment; saying without it there cannot be investment, which also means there cannot be development.

    Her words: “Savings habit is not very encouraging in Nigeria, and I think it is not peculiar to Nigeria; it is worldwide. So, I think it is necessary for this kind of commemoration to come up and create awareness from time to time

    “The commemoration of the World Savings Day is one of the platforms the bank is using to raise awareness of children and youths on the importance of savings, which is expected to lead to an increase in the levels of financial literary, financial inclusion (number of people that have banking relationship with financial institutions) culminating in a stable and sound financial system and ultimately a positive economic environment”.

    Adeyemi stressed that those, who are in the habit of savings are contributing to the economy of the country, and making themselves bette, citizenry for Nigeria.

    “If we are saving, we are saving for ourselves, when you save for yourself it also affect the country at large,” she added.

    She called on the state government to leverage on the CBN initiative to further create awareness and sensitise the people on the importance of saving.

    A staff of Consumer Protection Department of CBN in Abuja, Mr. Damola Atanda, who gave a talk at the event, said there is need to train the system irrespective of amount of money they are given.

    He noted that students, who have developed a saving habit, have been included into the country financial system, adding that it would translate to more money in the economy.