The Nation Newspaper

Tag: cbn

  • CBN’s policy triggers investment in TBs, bonds

    Central Bank of Nigeria(CBN) tight liquidity measures in the past 12 months would result in in-flow of funds to the banking industry, experts have said.

    They argued that CBN’s decision to continue tightening liquidity via raising the Monetary Policy Rate (MPR) would help in changing investors’ decision, and in moving funds from one segment of the financial market to another.

    According to them, the banking sector would benefit greatly as investors abandon the capital market for less risks and high yielding instruments such as Treasury Bills (TBs).

    Speaking on the issue, the Managing Director, Investment Banking, BGL Securities, Mr Wale Oluwo, said the decision to maintain MPR at 12 per cent will further depress the capital market because investors would abandon stocks for a safer financial instruments.

    Oluwo said the development would make fund managers and banks to continue to invest in safe government instruments such as TBs and bonds where they can make cheap and double digit returns without taking any risks.

    He said though banks would be making money from the two fixed-income instruments, they would nevertheless be able to provide money to the private sector of the economy. He said the apex bank plans to leave MPR at 12 per cent would hike the lending rates, thereby hindering private sector operators to access credit for growth.

    Accordingly, funds will not get to the private sector and their financial performance would continue to dwindle, further depressing the prices of their shares on the exchange. Individuals and households will also not have access to funds which will make the Nigerian economy to continue shrinking,” he said.

    Also, the Chief Executive Officer, Lambert Trust and Investment, Mr David Adonri, said: “The implication of the retention of MPR at 12 percent for the capital market is that the fixed income market will continue to maintain its dominant position.”

    He added that prevailing high interest rate on bank borrowing and increasing public borrowing will continue to crowd out the real sector and the equities market.

    The Vice Chairman, Anchoria Investments and Securities Limited, Dr Olusola Dada, said the outlook in the fixed-income market remains positive in view of the regulatory stands on certain financial matters.

    Dada said the stock market thrives on liquidity coming mainly from the private sector, adding that inability of the sector to access credit for investment purpose would have far reaching effects on the capital market.

    He said once private sector operators are unable to access the lending window available to them, they capital market runs the risk of getting liquidity for growth. He said investors now preferred treasury bills and bonds option where they would on average get some earnings to share.

    “I think the money market rates are now more appealing to some investors since they are sure of getting returns on investments. To some people, it is safer to put their money in fixed accounts, or invest in TBs for better yields. If CBN continues with its liquidity tightening measures by way of retaining MPR or increasing it further, the better for banks among other investors in fixed income securities. Conversely, the situation portends danger for capital market operators,” he said.

  • Banks lower charges to reduce customers’ burden

    Banks lower charges to reduce customers’ burden

    In line with the Central Bank’s directive, banks have started reducing charges on customers’ accounts to reduce their burden.

    Known as ‘Guide to Bank Charges,’ the initiative by the Central Bank of Nigeria (CBN) is to reduce charges seen as exploitative.

    Findings showed that many banks charge overdraft protection fees for honouring cheques that exceed the amount in a customer’s account; bank transfer fee for the transfer of money from one bank to another; credit reference fee for providing a third party with information about a customer’s creditworthiness; fee for counting coins; teller fee for interacting with tellers; safe-deposit box fee for storing items in a safe-deposit box valuable.

    There are also, the money order/cashier’s cheques charges as well as maintenance fees charged by the month or year for the maintenance of an account and fees for services like overdraft coverage and returned cheques, among others.

    The United Bank for Africa (UBA) Plc, it was learnt, has begun implementing the guideline. It has removed access fees for all electronic channels and lowered transaction fees for its range of electronic products (e-products) and services. In a statement, the bank said its gesture is meant to drive the cashless initiative and provide value added services to customers during this festive season.

    Under the plan, the bank’s customers will be allowed access transactions at significantly lower rates, across its electronic platforms such as the UBA Debit and Prepaid Cards, U-Mobile (Your Bank on your Mobile ) and U-Direct (Your Bank on the Web).

    Head e-Banking, UBA Plc, Adeyinka Adedeji, said the lender has also cancelled the N100 monthly access charge to U-Mobile and U-Direct for retail customers and removed N150,000 enrollment fee for web payment gateway installation on merchant’s website.

    Also, First City Monument Bank (FCMB) recently communicated its decision to reduce charges on online transactions to its customers.

    In an email entitled: Reduction of transaction charges on FCMBOnline, the bank slashed charges on transfers by 50 per cent, with transactions costing N200 reduced to N100; N300 to N150 and N500 to N250.

    Diamond Bank had before the cancellation of interbank ATM withdrawal fee, stopped all such fees. The lender said the move was to demonstrate its commitment towards customer satisfaction as well as its resolve to drive innovation in the industry.

    Last week’s stopping of N100 transaction fee on other banks’ ATMs by banks was seen as an initial test for the guideline, which is at its final stage of approval, a top executive in one of the commercial banks said.

    The apex bank said the guide would make it more difficult for banks to set high fees and charges without having reasons acceptable to the regulator. The CBN said banks’ drive to make inroads into the legions of the unbanked, financially illiterate and those isolated from traditional banking services through distance and hard terrain will be hampered by excessive charges.

    The source said the guideline was meant to address complaints arising from bank tariffs and other miscellaneous fees charged by banks on their customers’ accounts. He said the review was, among other things, discussed during the last Bankers’ Committee meeting in Abuja.

    He said the review was at ‘advanced stage’ and that the apex bank was working on harmonising areas to end the review.

    In a statement the CBN said complaints arising from high bank tariffs could threaten confidence in the banking system. It said in reviewing and updating the document on the charges, the CBN will be guided by, among other factors, financial inclusion, with emphasis on consumer protection, unit cost of banks, and contemporary developments in Nigeria’s banking industry.

    The banking watchdog said the guideline, which was issued to the industry several years ago, is being reviewed to protect bank customers’ interest. It lamented the practices in some banks, where products and services are deployed at exorbitant costs to the customers, saying that the high costs have helped in discouraging many people from assessing financial services.

    According to the apex bank, commercial and other banks need to be key partners in its drive for financial inclusion, even if for reasons of enlightened self-interest. In this context, there is a need to take a different approach to bank charges and fees to customers.

    Analysts said financial inclusion satisfies CBN’s needs to see a previously ignored sector of the public economy catered for and nurtured, and takes some of the heat off costs levied elsewhere on the banks’ clientele. It also opens a new sector that might be unprofitable for now but which will pay future dividends. The banks consider the time, money and effort invested in developing the so-called ‘unbanked’ market well-spent.

  • Experts decry slow pace of mobile money market

    EXPERTS have attributed the slow pace of growth of the mobile money market system to the poor commitment by operators and regulators.

    The experts, drawn from the banking, and telecoms industry, identified lack of commitment as bane of the industry.

    Head of Payments and Mobility, Accenture Nigeria, Mrs. Henrietta Bankole-Olusina, said mobile money operators and their regulators need to show more commitment, to attract investment and drive the industry.

    She said one year after the Central Bank of Nigeria (CBN) licensed the 16 mobile money operators, the sector is yet to appreciate the policy.

    She stated that the success of mobile money services, acceptance of the services by the rural dwellers and investment in mobile payment infrastructure, would only come when people realise the opportunities inherent in that industry.

    “Capital would always go to where there is an opportunity. Mobile money subscribers far outnumber Personal Computer users and the banked in Nigeria; a great opportunity the providers have failed to utilised,” she added.

    She decried the approach of the operators, noting that if they continued to target only the banked, then the unbanked that were the main crux of the initiative would not be captured.

    Also, Pagatech’s Chief Executive Officer, Mr Tayo Oviosu, observed that in view of the poor and unbanked number of Nigerians, the mobile money payment should have a wider coverage than it does now.

    He, however, linked the inability of some mobile money firms to roll out services to poor funding, technology challenges and limited distribution channels, among others.

    The President, Institute of Software Practitioners of Nigeria, Mr Chris Uwaje, also said certain loopholes must be addressed for the mobile money service to be successful.

    “There are lots of things we cannot go to the market and buy, one of those things are good policy and strategy instrument. We need them. We always find ourselves running without equipment, so we need to equip ourselves with what we need to run with,” he said.

  • Framework on agency banking coming

    A framework that will define the mode of operation for agency banking would be out before year end, The Nation has learnt.

    Speaking at the Enhancing Financial Innovation and Access (EFInA) forum in Lagos, Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi said the CBN Committee of Governors was fine-tuning the draft exposure of the agency banking.

    He said issues relating to some agents, type and nature of agents including considerations for super agents are critical areas being considered in the draft exposure.

    He said the processes for this line of banking to become functional will be finalised by this year-end.

    Sanusi said there have been improvements in the payment system, including the drive for financial inclusion.

    He said lenders have to address the need for special products that consider women and the handicapped to ensure that everyone is carried along.

    Sanusi said agency banking provides financial services to the widely dispersed population at affordable price and has assisted some countries in decongesting existing customers from crowded branches.

    He added that it would serve the same purpose in Nigeria.

    According to him, agency banking provides financial services by a third-party agent to customers on behalf of a licenced, prudentially-regulated financial institution.

  • NIBBS daily operation worth N70.02b

    The Nigerian Inter-bank Settlement System (NIBSS) handles about 140, 344 transactions, worth N70.02 billion daily, the Central Bank of Nigeria (CBN) has said.

    The transactions, which were recorded across various electronic payment channels, indicated gradual acceptability of the cashless initiative in the country.

    The statistics also showed that NIBSS processes 6,749 instant payments, 99,602 electronic fund transfers and 33,993 cheque transactions daily.

    “With an aggregate of N70.2 billion daily, the transactions across the three e-channels are worth N5.66 billion, N40 billion and N24.7 billion ,” the statement said.

    CBN Head, Shared Services, Mr Chidi Umeano, said the cash-less initiative hass gained since the beginning of the year. NIBSS has continued to process 4.2 million monthly inter-bank, instant payment and cheque transactions, he stated.

    Industry observers said the N70.02 billion daily transactions amount to N2.2 trillion in a month, adding that the figure would be higher if the trend continues.

    The Chief Executive Officer, Mobile Money Africa, Mr Emmanuel Okowgale, said the cash-less initiative has brighter prospects, if things go according to plans.

    He said the cash-less project would yield more financial values to the industry as time went on, advising Nigerians to continue to appreciate the beauty of using e-payment channels for transactions.

    He said mobile payment system has worked in Kenya, among other countries, arguing that it is taking shape in Nigeria.

    In a related development, the Managing Director and Chief Executive Officer, NIBSS, Mr Adebisi Shonubi, said continued encouragement of the use of PoS terminals is critical to the success of the cash-less initiative.

    “We strongly believe that the enhancement of PoS adoption relies on high PoS availability and connectivity and consequently the expansion of telco facilities beyond the conventional GPRS to CDMAs.”

    Shonubi argued that the Nigerians possessed the acumen required for the success of the cash-less project.

    On his part, the CBN Deputy Governor, Mr Tunde Lemo, said the number of deployed and active PoS terminals had grown from 5,557 as at January 2012 to 104,858 by October 14, 2012.

    Lemo, who was represented at a forum in Lagos by an official of Shared Services Department, CBN, Mr Chimene Eleonu, said another 176,604 PoS terminals were already registered.

    He lamented the huge gap between registered and deployed PoS, arguing that the gap was due to lack of capacity on the part of the payments terminal service providers to meet PoS demand.

  • Sanusi, Rewane query Fed Govt’s N23b margin bailout

    Sanusi, Rewane query Fed Govt’s N23b margin bailout

    Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi and Bismarck Rewane’s Financial Derivatives Company (FDC) Limited have picked holes in the N22.6 billion debt relief on margin loans extended by the Federal Government to some 84 stockbrokers last week.

    Sanusi queried the existence of any margin loan hanging on any stockbroker arguing that by virtue of its definition, technique and operations, brokers were not liable for any further indebtedness from margin loan agreement other than their deposits for the margin loans.

    He said the liabilities arising from margin loans belong to the banks, which were the custodians of the margin loans agreements and were required to promptly activate the margin loan terms where share prices crash beyond the limit set.

    According to him, under the margin loan arrangement, stockbroker would put up a certain percentage of the funds and the bank would come up with the balance with a provision mandating the bank to sell the shares once the prices fall below certain limits.

    Although he acknowledged the absence of clear-cut margin rules during the 2004-2008 capital market boom period, Sanusi said banks should bear the brunt of not being able to sell the shares, rather than the brokers.

    He noted than when he was in charge of risk management at First Bank of Nigeria (FBN), he made provisions for all the margin loans because they were recognized then as the risks of the bank.

    He however said Nigerian capital market needs to draw the line over the past and move on to new era of stability.

    FDC in its bi-monthly economic and business update said the margin loan bailout raised more questions of moral hazards and relevance than the intended benefit of stimulating the capital market.

    According to the report, the selection of 84 stockbrokers to be anointed as debt-free, throws out the question of selective breeding and more importantly: moral hazard.

    FDC noted that moral hazard played a central role in the events that led to the capital market crisis and all stakeholders need to appreciate this role to adequately design future reforms and to prevent disasters down the line.

    “By issuing the “go and sin no more” mandate to 84 stockbrokers, the finance ministry has set a precedence that excessive risk will not be punished or in other words, issued the stockbrokers with subsidised risk-taking. This fosters moral hazard where a party feels that if it can take risks that another party has to bear, then it may as well take them. If a party has to bear the consequences of its own risky actions, it will act more responsibly. The finance ministry has now pardoned the excessive risks taken by the stockbrokers and thereby increases the chance of moral hazard coming into the equation,” FDC stated.

    The report noted that another important issue of moral hazard thrown up by the forbearance is that there is no reward for the stockbrokers that have stayed away from excessive leverage or refinanced their debt.

    It pointed out that stockbrokers that paid off the majority of their debt by selling off their assets are now at a disadvantage to the 84 that received the “clean bill of health” noting that not only will these stockbrokers feel disgruntled but they will also feel excessive risk-taking is incentivised by the regulators.

    It noted further that the 84 stockbrokers handed forbearance were not inherent to the economy or the capital market itself.

    “A market gain of over 26 per cent this year further shows that with debt overhang on the 84 stockbrokers the capital market can recover provided steps are taken to boost investors’ confidence.With the forbearance completed for the 84 stockbrokers, other sectors of the economy will question why the bailout has not been extended to them. Indeed, there are moribund companies around the country that might benefit from a bailout and also go a long way to solving the unemployment problem. While the FGN might have the right intentions in handing forbearance to the stockbrokers, the value is lost in the moral hazard it throws up,” FDC stated.

  • CBN’s fresh guidelines on bank fraud coming

    The Central Bank of Nigeria (CBN) is contemplating introducing Public Key Infrastructure (PKI) framework to guide against frandulent transactions in banks.

    PKI is a set of hardware used in creating, managing, distributing, storing and revoking digital certificates used for transactions. The hardware helps in validating the identities of customers during transactions.

    The concept is expected to help improve transactions and prevent the theft of depositors’ funds through scams and forgeries.

    CBN’s Director of Communication Mr Ugochukwu Okoroafor, said: “We are working on Public Key Infrastructure mechanism to track down transactions. This will enable us to know when, where and who conducts transactions in the industry.”

    He said the concept would help in ascertaining the veracity of claims made by customers after transactions.

    “Through the Public Key Infrastructure, the banks would be able to know those who are conducting transactions, authenticate them, as well as proving that they were the ones carrying out the transactions. CBN is working on the framework for the growth of the industry,” he added.

    He said the industry is set for greater heights in view of the measures put in place to protect customers.

    An investment analyst, Mr Tayo Bello, said corruption is the major problem in the industry globally, noting that fraudulent practices was the major cause of the distress in the banking industryin the 80s.

    Bello said CBN was restoring confidence in the industry. He advised that the reforms must continue to improve growth. He said the reforms had helped in engendering confidence, and made customers believe in the system.

    He said once customers are sure of the safety of their funds, they would not hesitate to patronise the products offered by banks.

  • ‘Govt records N459.1b budget deficit in Q3’

    The nation’s budget deficit more than doubled in the third quarter to N459.1 billion ($2.9 billion), the Central Bank of Nigeria (CBN) has said.

    The budget deficit of sub-Saharan Africa’s second-largest economy jumped from N211.8 billion in the previous three months and N161.1 billion in the third quarter of 2011, the Abuja-based bank said in a report on its website.

    “The deficit was financed mainly from domestic sources, particularly through the issuance of additional Federal Government of Nigeria bonds,” the bank said.

    The country increased its target for this year’s budget deficit to 2.97 per cent of economic output in February, from a 2.77 per cent target announced in December 2011, after it added N733 billion of spending on fuel subsidies, according to the Finance Ministry.

    The country wants to narrow the fiscal deficit to 2.2 per cent of GDP next year, according to the October 10 budget proposal by President Goodluck Jonathan.

    During the period, N26.2 billion were withdrawn from the excess crude account “to bridge the shortfall in revenue for the period,” leaving $9.3 billion in the account, in which Nigeria saves revenue from crude sales higher than the budgeted price, the bank said.

    The government aims to raise savings in the account to $10 billion to provide a buffer against global economic uncertainty. Net foreign-currency inflows through the bank in the quarter stood at $5.8 billion, with inflows at $14.4 billion and outflows at $9.2 billion, according to the report.

  • Importers, agents hail banks over e-form

    The introduction of electronic foreign exchange form (e-form M) by commercial banks, has earned the praise of importers and clearing agents.

    The e-form, they said, would boost cargo import and facilitate trade at ports.

    The Managing Director, Oguns Shipping Company,Mr Segun Ogunsanu, said the e-form was initiated by the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS), as part of the Federal Government’s efforts to start single window operations at the port.

    Ogunsanu said the pilot phase for the automation of forex forms on the trade monitoring system, otherwise known as the single window for trade started in seven banks. The banks are Unity Bank, Guaranty Trust Bank, First Bank of Nigeria, Diamond Bank, Zenith Bank, Wema Bank and Standard Chartered Bank.

    Ogunsanu said: “Any person intending to import physical goods shall process e-form M through any of the commercial banks irrespective of the value and whether or not payment was involved.

    The e-form has six months validity except for plants and machinery, which last one year. Requests for revalidation are to be directed to CBN’s director of Trade and Exchange.

    “Supporting documents would be marked “Valid For Forex or Not Valid for Forex”depending on whether or not foreign exchange remittance would be involved. And applications for goods subject to destination inspection must carry the “BA” code, while those exempted shall include “CB” in the prefix of the numbering system of the form M,” he said.

    Another importer and Executive Director, Bolas Motors, Mr Kayode Agbabiaka, said the requirements for filling the e-form M include the registration of Taxpayer Identification Number (TIN) at the Federal Inland Revenue Service (FIRS); validation of TIN by customers with TIN at FIRS offices and logging on to FIRS portal to register.

    Agbabiaka said importer or his clearing agent is also required to forward his original pro-forma invoice, insurance and other document to bank for approval after which the bank sends e-mail notification to the importer or his agent once the Form M is approved by the bank and also when the Form M is accepted or rejected by the scanning firm.

    Also, the National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu, said the introduction of e-form would facilitate trade and boost cargo clearance, adding that it would reduce human contact and hasten cargo clearance at ports.

    To ease cargo clearance, he said, the e-form M should carry a description of the goods to facilitate price verification like: product type and category; mark or brand name of the product; model name or reference number; description of the quality, grade, specification, capacity, size, performance; quantity and packaging.

    The e-form, Shittu added, should be valid for importation only after acceptance by the relevant scanning/risk management provider. Therefore, banks have to confirm acceptance of the e-form M before continuing with other import processes.

    Documents for each import transaction, he said, must carry the name of the product, country of origin, specifications, date of manufacture, batch or lot number and standards to which the goods have been produced like British Standards among others.

  • CBN urges banks to protect customers

    CBN urges banks to protect customers

    The Central Bank of Nigeria(CBN) has urged money deposit banks (MDBs) to set up effective consumer complaints management framework to protect the rights of their customers.

    CBN Governor, Mallam Sanusi Lamido Sanusi, said the apex bank has created a customer protection unit to protect the interests of its customers, urging the MDBs to toe the line of the CBN because whenever customers have issues, not many of them come to the CBN to lodge complaints.

    “But that is a problem because the only people that come to us are those who know they can come to the Central Bank. The major challenge is not for the CBN to protect consumers, but for the banks themselves to make sure that their customers are protected; and to make sure they put in place structures to receive complains without them coming to the Central Bank. We are working with Bankers Committee on that,’’ Sanusi said.

    He outlined that the apex bank’s financial inclusion strategy provides the road map for the activities of all stakeholders in the provision of financial services for growth and development of the economy.

    He reiterated that the CBN would aim to reinforce its function in ensuring monetary stability and sound financial structure, to enhance economic development

    According to him, in addition to the implementation of key interventions, the apex bank will continue to adopt some specific models to help drive financial inclusion, including the transformation of the payment system, ensuring healthy financial evolution through the development of specialized banks and alternative sources of finance and financial education and consumer protection.

    He said the apex bank was committed to creating effective policy and regulatory environment that empower and protects the populace.

    Meanwhile, the CBN Governor has explained that the apex bank decided to use banks-led model to jumpstart its mobile money initiative because the CBN is primarily a regulator of banks and as such, will be in better stead to manage teething problems that may arise from a novel initiative like mobile money.

    He added that with the banks taking the formative position, the apex bank would then study the behaviours of the telecoms companies to decide on feasibility of expanding the frontiers of the new initiative without undermining the system.