The Nation Newspaper

Tag: cbn

  • CBN, banks to review charges

    CBN, banks to review charges

    The Bankers’ Committee, comprising the Central Bank of Nigeria (CBN), all the Deposit Money Banks, Micro Finance Banks and the Nigeria Deposit Insurance Corporation (NDIC) is reviewing guidelines on new bank charges.

    The Director, Banking Supervision of the CBN, Mrs Agnes Tokunbo Martins while addressing journalists yesterday in Abuja, said no final decision has been taken on the guideline for new bank charges.

    Managing Director of Access Bank, Aig-Imokhuede, said bank charges cannot stop particularly when lenders are providing value. He however, said the charges will come down this year from N5/mill to N3/mil. He said Commission on Turnover (COT) will continue to reduce to allow bank charges to decline.

    He said that the Committee also decided, “no bank customer should pay Automated Teller Machine (ATM) charges, adding that bank customers who use ATM cards on machines other than their bank’s ATM machines, are not expected to pay any charges because, “that is the banks contribution to alleviate some of the problems that bank customers face. Besides, he said that the Committee directed that customers should take up such issue with any bank that charges them for using their ATM.

    The Managing Director of Zenith Bank PLC, Godwin Emefiele, said the Committee also reviewed the success of the cashless policy in Lagos and hopes that in due course; it will be replicated in other parts of the country. “But for now, we are concentrating on cluster locations where cash is used predominantly to see how the people can be convinced to go cashless. A date for the movement of cashless policy from Lagos to other parts of the country will be announced later,” he said.

    He stated that the Committee also discussed customer identity management to boost consumer credit to borrowers, saying the weakness in extending consumer credit to bank customers, “is that there is no data bank of information on customers.” Consequently, he said the Committee is setting up the customer identity management team that would help to build a data base.

    To this end, a bio-metric project where customers are assigned unique identification numbers and thumb prints taken, will soon commence, he said. He added, “once these information is taken, all banks will have access to that information irrespective of where the initial account is domiciled.  Because of the unique identification number, it will now be easy for banks to lend money to customers with good repayment records, or clean slate and those who fail in repaying their loans, will also be easily identified and refused further credit by the banks.”

    As part of the cashless project, Emefiele stated it was clarified at the meeting that the N150,000 third party cheque payments is nationwide. He said here will not be any cash payments on third party cheques for sums more than N150,000, and it is not restricted to Lagos.

    Aig-Imokhuede added that the banking industry is serious about capturing those outside the banking system through financial inclusion strategies. Consequently, he said the Committee has decided to use Borno as the pilot for financial inclusion, adding that if it works in Borno it will work anywhere in Nigeria. “We will concentrate efforts on Borno state, which was chosen because it is in the North East of the country with its social demographics in terms of poverty, “ added.

    Another reason for choosing Borno he noted is because women, youths and those in the rural areas do not have access to financial services, hence the decision of the committee to concentrate efforts in these areas.

    The financial inclusion strategy for Borno he said is near finalization. He said with a population of 5 million in 2010, only 280,000 had access to payments, with savings accounting for only 14 per cent of the population. He noted that less than two per cent had access to credit; pensions 2.9 per cent  and less than 1 per cent had access to insurance.

    The Bankers’ Committee he said, did not adopt the national averages for financial inclusion for Borno, becuase “the idea is to get the number of ATMs up from 95 today to 770 in 2020, branch networks from 72 bank branches to 120 in 2020  and Point of Sales (PoS) from less than 300 to just under 10,000 by 2020.”

  • CBN won’t relax control of MfBs, mortgage firms, others

    The Central Bank of Nigeria(CBN) will continue to monitor Development Finance Institutions (DFIs) for growth this year.

    In a report on activities of Other Financial Institution Department (OFID) on its website, it said the aim of monitoring CBN primary mortgage banks, finance houses, microfinance banks, among others, grouped under DFIs is to see whether they are in order.

    CBN said: “The aim of monitoring DFIs is to institutionalise strong corporate governance and risk management programmes in those firms. The exercise will enable the companies to effectively deliver on their mandates. The bank shall also continue to enforce the Uniform Prudential and Assessment Standards prescribed for DFIs in Africa, developed under the aegis of the Association of African Development Finance Institutions (AADFI) for benchmarking operations of the DFIs.

    “All Other Financial Institutions (OFIs) are required to strictly comply with the prudential requirements specified in the existing guidelines/circulars, directives and provisions of BOFIA CAP B3 Laws of the Federation of Nigeria, 2004. Appropriate sanctions shall be imposed on any OFI found in contravention of the prudential guidelines, circulars, directives or provisions of the BOFIA, 2004.”

    The CBN also said it would sustain the implementation of the Microfinance Certification Programme for Microfinance Banks (MfBs). It added that it would continue to license microfinance banks in line with the prescribed new capital regime of N20 million, N100 million and N2 billion for unit, state and national microfinance banks.

    The apex bank said it is introducing specialised second-tier institutions that would provide short-term liquidity, long-term funding or guarantees to mortgage banks and housing finance providers.

    According to CBN, reforms of the primary mortgage banks shall, among other things, target the enhancement of access to mortgage/housing finance, introduction of sound risk management, strong corporate governance and the promotion of secondary mortgage market.

     

  • CBN: 50 big customers owe banks N2.39tr

    No fewer than 50 top customers are owing banks N2.39 trillion, the Central Bank of Nigeria (CBN) has said.

    Their debt represents 30 per cent of the N7.87 trillion owed the banks, according to CBN Financial Stability Report for June, last year.

    The report put the banks’total credit at N7.2 trillion at the end of December 2011.

    The report signed by CBN Governor Sanusi Lamido and Deputy Governor, Financial System Stability, Kingsley Moghalu, said top 100 obligors accounted for 39.1 per cent of the gross credit, indicating a high loan concentration within the banking sector. The ratio of non-performing loans (NPLs) to gross loans declined by 0.6 per cent from 4.9 per cent, but falls within the regulatory threshold of five per cent.

    The ratio decline, the report said, was partly attributable to the sale of N52.85 billion Eligible Bank Assets (EBAs) to the Asset Management Corporation of Nigeria (AMCON) by six banks.

    The NPL classified as substandard was N74.81 billion (22.3 per cent), doubtful, N123.44 billion (36 per cent) and lost loans, N141.63 billion (41.7 per cent). The NPL also declined by 5.6 per cent to N339.88 billion from N360.09 billion.

    A further deterioration of earlier classified loans resulted in an increase in loan loss provisions from N202.27 billion to N242.13 billion.

    The CBN said it received 444 petitions, amounting to N1.41 billion from customers, relating to alleged excess charges and other unethical practices. Its intervention resulted in banks refunding N5.76 billion to customers.

    The report said banks are facing current or prospective risk arising from changes in the business environment and adverse decisions. Others are improper implementation of decisions or lack of responsiveness to changes in environment.

    The CBN noted that as the environment changes because of changes in economic and regulatory framework, it is critical that financial institutions manage the risk from their business strategy.

    The report said a stress test conducted at the end of June last year, evaluated the solvency risks in banks’ balance sheets and imbalance in the financial system. The result of the exercise reaffirmed the increasing resilience of the industry to shocks. Comparatively, the results showed slight improvements over the December 2011 position in credit, foreign exchange and interest rate risks; liquidity risks increased marginally.

    The reforms in the sector, CBN said, would address liquidity and exchange rate volatility concerns in the near to medium term. It added that liquidity risks were adjudged significant as the impact of 10 per cent general run on the industry’s liquidity resulted in 815 basis points reduction in liquidity ratio. The results, according to the report, showed that small and medium banks were less vulnerable to liquidity risks than big ones.

     

  • I’m not interested in CBN’s job – Yero

    I’m not interested in CBN’s job – Yero

    Governor Mukthar Ramalan Yero of Kaduna State said on Tuesday that he was satisfied with his current position as governor of the state and is therefore not interested in taking up appointment as Governor of the Central Bank of Nigeria.

    In a statement made available to The Nation in Kaduna and signed by the Director- General, Media and Publicity, Ahmed Maiyaki, the goovernor said that his immediate concern was how to deliver on the mandate given to his government by the people of the state.

    While describing the recent rumour as mischevious and the handiwork of mischief makers, the governor said that he was completely devoted to delivering democracy dividends to the people of the state.

    The statement reads: “It has come to our notice that some miscreants are peddling rumour of a purported move to appoint His Excellency, Governor Mukhtar Ramalan Yero as Governor of the Central Bank of Nigeria (CBN) at the expiration of the tenure of the current Governor of the apex bank, Sanusi Lamido Sanusi.

    “While we may have ignored this insinuation as another handiwork of mischief makers, it is pertinent to put the record straight in the interest of providing accurate information to the people of Kaduna State and beyond, to save them from falling gullible to falsehood.

    “We wish to state categorically that His Excellency is completely devoted to delivering democracy dividends to the people of Kaduna State, to justify the mandate giving to this administration by the people.

    “The Governor has no interest in taking up appointment at the CBN or any other institution. His Excellency, Alhaji (Dr) Mukhtar Ramalan Yero remains committed and focused towards providing purposeful leadership that will bring about rapid transformation of Kaduna State.”

     

  • CBN to execute school project in Dukku Emirate

    CBN to execute school project in Dukku Emirate

    The Central Bank of Nigeria on Monday said it would execute a project in one of the schools at Dukku Emirate in Gombe State as part of the bank’s intervention programmes on education.

    The CBN Governor, Malam Sanusi Lamido, disclosed this during a visit to the Emir of Dukku, Alhaji Haruna Rasheed in Dukku.

    Lamido told the Emir to identify the school where the bank would execute the project.

    “We have good news. The Central Bank of Nigeria is embarking on projects in schools this year.

    “We will like the Emir to name a school in Dukku so that we will embark on the project,” he said.

    Sanusi commiserated with the new Emir over the death of his father, Alhaji Abdulrasheed and congratulated him on his appointment.

    He said the appointment of the new Emir would bring peace and development in Dukku Emirate and Gombe as a whole.

    Responding, the Emir thanked the CBN governor, management and staff of the bank for identifying with him during the death of his father.

    Speaking with journalists after the visit, Sanusi said the project to be executed in Dukku was in line with the bank’s policy.

    “Usually CBN does interventions every year and what we said is that this year part of our interventions will be in Dukku because we do it in every zone of the country.

    “Last year, we did it in Borno State and this year, we will do it in Gombe State,” the News Agency of Nigeria quoted the CBN governor as saying to journalists.

     

  • More loans for SMEs, says CBN

    SMALL and Medium Scale Enterprises (SMEs) will get more loans after the Central Bank of Nigeria (CBN) reduces the cost of banking services by 30 per cent, the Head, Shared Services, CBN, Mr Chidi Umeano, has said.

    He told The Nation that efforts were on to ensure that banks achieved 30 per cent cost reduction, and further lend to SMEs, among others in the economy.

    CBN, he said, has identified cost drivers in the industry, and the possibility of reducing them to aid lending.

    “Banks are incurring huge expenses in cash handling, he said, adding that they have in the process transferred the cost on loans seekers,” he said.

    He said CBN introduced cash-less policy to reduce the cost of banking services, and further increase accessibility to loans. According to him, there would be more lending opportunities for SMEs, as the cash-less policy takes off fully in the country.

    Umeano said CBN had met SME operators in Lagos, to fashion out ways of using the cash-less programme to enhance their operations.

    According to him, there would be more lending opportunities for SMEs, as the cashless policy takes full effect in the country.

    He said: “The SMEs owners have been accommodated well in the cashless net. They are part of our plans. We have explained the value chains in the cashless initiative to them, the use of Point of Sale (PoS) providers, and what they need to do access facilities from the banks.

    “We believe that there will be increase access to facility and service levels across the industry, once banks have reduced their operational cost by 30 per cent. The motive for the cashless policy is to reduce cost of banking services (that is the cost of credit and the likes in the economy). This will increase lending opportunities for informal sector operators, that formed 70 per cent of the country’s population.”

    The cash-less guidelines, he said, had been structured in such way that SME owners are protected.

    CBN, he said, has provided card acceptance guidelines that accommodate all operators in the financial chains.

    Manufacturers Association of Nigeria (MAN), president Alhaji Bashir Borodo has praised the CBN initiative. He said the decision to make banks to lend more to SMEs is a good one capable of stimulating the economy’s growth.

    He described funding as the major problem facing SMEs, adding that their potentials would be galvanised when they have access to funds.

    Borodo said CBN’s reforms agenda “greatly” impacted on the economy, stressing that the apex bank has assisted SME operators via granting them N200 billion loans two years ago.

    A teacher at the Lagos Business School, Dr Austin Nweze, said SME operators had long been denied access to loan. Nweze said it would be good if banks are able to increase funding to SME owners. He said the problem facing banks is the capacity to do what is going to benefit the economy.

     

  • ‘CBN’ll sustain tight monetary policy’

    The Central Bank of Nigeria (CBN) is expected to sustain firm monetary policy this year, analysts at Renaissance Capital (RenCap), an investment and research firm has said. In an emailed report obtained by The Nation, the firm said, given its view on inflation, there is scope for a 100 basis point rate cut in 2013 to 11 per cent, although such slash will not take away from the Monetary Policy Committee’s (MPC’s) firm policy stance.

    “Downward adjustment of the Cash Reserve Requirement (CRR) would be more effective at relaxing the policy stance, than a rate cut. It is evident from the January MPC statement, that the committee would prefer to keep monetary policy from becoming overly accommodative, so that it can contain inflation and sustain a firm naira,” it said. It said the apex bank does not expect a change to the Cash Reserve Ratio from 12 per cent in 2013.

    Also, analysts at Cordros Capital Limited, said the CBN may not reduce the Monetary Policy Rate (MPR) within the first quarter. It said the CBN also retained the MPR at 12 per cent with a corridor of plus or minus two per cent, Standing Deposit Facility at 10 per cent and Standing Lending Facility at 14 per cent. It also maintained the Liquidity Ratio (LR) at 30 per cent and Cash Reserve Ratio (CRR) at 12 per cent.

    The firm explained that the decision means that other forms of monetary policy, such as Open Market Operations (OMO) will continue to be the preferred method for managing liquidity.

    It said inflation still remains above the CBN’s single-digit target, noting however that the pressures are expected to ease in upcoming months.

  • CBN loans banks N356b to shore up liquidity

    CBN loans banks N356b to shore up liquidity

    THE Central Bank of Nigeria (CBN) advances an average of N356 billion to deposit money banks monthly to boost their liquidity, The Nation has learnt.

    The fund, a Standing Lending Facility (SLF), is given at 14 per cent as approved by the Monetary Policy Committee (MPC).

    The SLF is an overnight fund available on banking days between 2 pm and 3.30 pm, with settlement done on same day value. The SLFs are available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the regulator.

    According to a CBN Financial System Stability Report, the total SLFs granted to banks last November was N356.83 billion, compared with N319.71 billion in the preceding month. Average daily request for SLF was N16.99 billion, compared with N15.99 billion in October.

    Also, total assets and liabilities of the deposit money banks (DMBs) amounted to N21.8 trillion, showing an increase of three per cent compared with the level at the end of October.

    Such funds were sourced mainly from mobilisation of time, savings and foreign currency deposits (N324.8 billion) and demand deposits (N317.4 billion). The funds were used, largely, to buy Federal Government securities (N454.7 billion), extend credit to the private sector (N250.2 billion) and unclassified liabilities (N173.0 billion).

    At N13 trillion, commercial banks’s credit to the domestic economy grew by 5.4 per cent, compared with the growth of 3.4 per cent in the preceding month. Monthly, the credit to the private sector rose by 2.7 per cent, while credit to the government rose by 17 per cent relative to the level in the preceding month.

    On January 21, the CBN retained the Monetary Policy Rate (MPR) at 12 per cent for the for eighth time consecutively, since November 2011, due to inflationary concerns and uncertainty in the global economy.

    The CBN retained the MPR at 12 per cent with a corridor of plus or minus two per cent, Standing Deposit Facility at 10 per cent and SLF at 14 per cent.It also maintained the Liquidity Ratio (LR) at 30 per cent and Cash Reserve Ratio (CRR) at 12 per cent.

    Analysts insist that the decision means that other forms of monetary policy, such as Open Market Operations (OMO), would continue to be the preferred method for managing liquidity.

    Razia Khan explained that with the threat of a higher benchmark crude price being adopted in this year’s budget, there is the likelihood that the CBN would leave the rates unchanged today. She said there are some interesting points to note about the December inflation figure, which decelerated to 12 per cent yearly from 12.3 per cent.

    According to her, the key driver of Consumer Price Index appears to have been a rise in core inflation – up to 13.7 per cent as at December last year.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    “

  • CBN monitors banks’ payment channels

    CBN monitors banks’ payment channels

    The Central Bank of Nigeria (CBN) is monitoring banks that have not complied with the directive on Payment Card Industry-Data Security Standard (PCI-DSS) to secure payment channels in the country.

    PCI-DSS is a set of standards and security due diligence practice issued by the United States-based Payment Card Industry Standard Security Council (PCI-SSC). This is a global Information and Technology (IT) regulatory body which sets the pace for security standards to ensure that the safe handling of payment card data.

    The scheme is intended to optimise the security of credit, debit, and cash card transactions, and protect card holders against misuse of their personal information.

    CBN last year directed banks to comply with the standards to improve electronic payment transactions and operate in line with global practices.

    Speaking to The Nation, the Head, Shared Office Department, CBN, Mr Chidi Umeano, said some banks have complied prior to the December 2011 deadline given to them, while others are yet to.

    He refused to mention the names, saying that divulging such information is not healthy for the industry.

    He said: “A lot of banks have complied with the directive on PCI-DSS. There has been appreciable progress on this issue. However, some banks have not complied, prompting CBN to be monitoring them. We are watching the activities of such banks to ensure they comply.Though they have expressed commitment to enhancing the security of their payment channels. They have not fully complied. The banks are at various stages of compliance.”

    He said it has become imperative for financial institutions to comply with the PCI-DSS as Nigeria deepens its cash-less initiative.

    Mr Umeano said when banks are PCI-DSS certified, they will secure the data of their customers well.

    He said this is the only way operators in the nation’s financial chains would help in curbing electronic payment fraud, restore customers’ confidence and operate in line with the globally acceptable standards set for cashless programmes.

    According to him, efforts are being intensified to promote cash-less initiatives and further strengthen the economy. He said issues relating to the growth of the cashless economy policy are being given attention by the regulators.

    On the Fraud Forum Committee, Umeano said the committee has been able to reduce electronic payment fraud. He said the committee comprising chief executive officers of banks, Visa Card, MasterCard, among other stakeholders in the financial sector, have been meeting to share ideas on how to reduce fraud in the industry.

    “To some extent, the committee has achieved some laudable goals in the country. The committee has a mandate that is not time-bound. We will continue to work together to curb card payment fraud and related activities.

    “We organised our annual meeting last December where we delivered a report on the activities of the committee. At the meeting we review our activities. Some strategies were mapped for 2013 for the committee. We resolved to continue to do what we are doing in the New Year, by ensuring that all fraudulent cases were reported and checked,” he added.

  • CBN to increase N300b power fund

    CBN to increase N300b power fund

    The Central Bank of Nigeria (CBN) plans to extend the N300 billion Power and Airline Fund (PAIF) to increase funds for power sector projects and further create amenable structures directly suitable to the peculiarities of the power sector.

    The extension is one of the major planks of the apex’s bank and banking sector’s economic development programme for this year. It will include the size, tenors, structures, projects, collaterals and other terms in a holistic approach to further align the financial system to the critical funding requirements of the power sector.

    The power sector transformation is a major thrust of Federal Government’s Transformation Agenda with a major target of generating 40,000MW by 2020.

    However, it has been estimated that the power generation segment would require investments of at least $ 3.5 billion yearly over the next 10 years to meet the target.

    The CBN launched the power sector fund in August 2010 with the objectives of addressing the critical finance needs and peculiarities and stimulate lending to the power sector. Managed by the Bank of Industry (BOI) under the technical assistance of the Africa Finance Corporation (AFC), the power fund prioritises key power projects and provides funds at an interest rate of 7.0 per cent payable on a quarterly basis. The fund covers refinancing of loans and leases as well as working capital for the sector.

    Sources said the extension is targeted mainly at increasing funding to the power sector but would also consider inputs from banks and other stakeholders on other structures and terms that would further improve the catalytic impact of the fund.

    The sources noted that the extension of the power fund was in line with the responsibilities of the apex bank under the founding charter of the power fund.

    Under the charter of the power fund, the CBN is saddled with articulation of clear guidelines for the implementation of the fund, provision and determining of the limits of funds, specification of the lending rate and review of review of the fund guidelines as may be necessary from time to time.

    This initiative could help to quickly unlock the potential benefits of the power sector reform. The power fund’s objectives include accelerated development of electric power projects, especially in identified industrial clusters, serving as credit enhancement instrument to improve the financial position of banks, leveraging additional private sector investments in the power sector and down the line, improved power supply, employment, and enhanced living standard for Nigerians through consistent power supply.

    Eligible projects and companies for the power funds cover any corporate entity, duly registered in Nigeria, involved in electricity power supply value chain that includes power generation, transmission, distribution, gas-to-power projects and associated services.

    Also, eligible projects can be promoted by private or public sector sponsors or a combination of both but must be structured either as profit-oriented business or a public service, provided that contracted cash-flows or financing support exist to ensure repayment of principal and interest, as well as long term viability.

    Also, the projects could be already existing and in operations, in design and development, under construction, or existing but operationally inactive.

    Facilities that could be taken under the power fund provided for the whole gamut of needs of operators and include long term loans for new power projects, refinancing loans for restructuring of existing loans and leases and working capital loans.

    The power fund could provide as much as 70 per cent of the total cost of the project while the loans shall have a maximum tenor of 15 years as determined by the project’s cash flow profile not exceeding July 31, 2025.

    The fund provides for moratorium of up to six and a half years on the amortised repayment schedule of the loans. No upfront fee or charge is deductible on any facility under the fund.

    In recognition of the importance of the financial system as a catalyst for national economic development; the CBN had in 2009 started a regulator-led collaborative process to enable the financial system participate more effectively in the Nigerian real sector.

    The apex bank uses the Bankers’ Committee to enable banks to articulate and strategise on ways to boost lending to most critical sectors of the economy for sustainable growth.

    The Banker’s Committee had during its fourth Annual Retreat held in Calabar in December last year reaffirmed its commitment to providing finances to the three key sectors of power, agriculture and transportation.

    It noted that it decided to focus on the three key sectors because of the foundational importance of the sectors for driving growth and development of the economy.