The Nation Newspaper

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  • Mortgage banks scramble to raise new funds

    Ahead of the April 2013 deadline for new capitalisation, mortgages banks are struggling to raise new equity funds to meet new minimum capital requirement under the new Central Bank of Nigeria’s (CBN’s) policy framework for mortgage banks.

    Under the new CBN’s framework for mortgage banks, they will be classified into national and state mortgage banks, with the geographic demarcation as benchmark for minimum capital requirement. National mortgage banks are authorised to operate in all states of the Federation while state mortgage banks are restricted to their registered state.

    National mortgage banks are required to have minimum capital base of N5 billion while state mortgage banks must have N2.5 billion. The deadline for full compliance is April 30, 2013.

    Industry sources indicated that mortgage banks, which capital had been eroded by the meltdown at the capital market and operational losses, were finding it difficult to source new equity funds.

    Despite of a year-long intention to raise funds, none of the mortgage banks have been able to float supplementary new issues. But many mortgage banks still believed they could raise additional funds before the deadline.

    Resort Savings & Loans Plc, one of the four quoted mortgage banks, three weeks ago got the approval of shareholders to raise new equity funds towards supplementing its capital ahead of the recapitalisation deadline.

    According to the resolution, Resort could be seeking to raise funds through public offer, private placement, and rights issue among others.

    Aso Savings and Loans Plc, another quoted mortgage bank, had earlier indicated plans to raise new equity funds.

    “Let it be on record that had it not been for losses in operations in the past two years which we promise to redeem, the bank would not have had a need for new capital,” chairman, Resort Savings & Loans, Chief Francis Adefarati told shareholders prior to seeking approval to raise new funds.

    The capital raising efforts of mortgage banks have been hampered by both the general lackluster state of the inactive primary segment of the capital market and also the poor performance of mortgage banks’ shares at the stock market.

    The trio of Aso Savings, Resort and Union Homes Savings and Loans has so far this year stagnated at their nominal value of 50 kobo while Abbey Building Society is at its lowest value of N1.37 per share. Altogether, the subsector’s market value stands at N19.66 billion, barely a third of market capitalisation of only Union Homes, which had closed January 2008 at N7.66 per share.

    The large outstanding share capital of mortgage banks relative to their assets base has also encumbered new fund raising without addressing issues of share reconstruction and valuation. Resort has 11.33 billion ordinary shares of 50 kobo each, equivalent to N5.66 billion, almost a double of its shareholders’ funds of N2.87 billion and still above its total assets of N5.24 billion, according to the latest audited report ended December 31, 2011. But Resort in the interim report for the period ended September 30, 2012 reported total assets and net assets of N8.65 billion and N5.73 billion respectively.

    Aso Savings has the second sectoral outstanding shares of 8.68 billion shares, nominally valued at N4.34 billion. However, audited report and accounts for the year ended March 31, 2012 showed that Aso Savings had net assets of N3.14 billion, less than its nominal value and new minimum capital requirement for national mortgage banks.

    The Nigerian Stock Exchange (NSE) operates a stop-gap trading mechanism that does not allow share prices to drop below their nominal values.

    “The performance of primary mortgage institutions (PMIs) has not really been encouraging. The requisite fundamental depth to warrant capital injection by impending shareholders may not really be there. Shareholders look for strong fundamental value in the past to determine their interest going forward. If you look at the financials of most of the PMIs, the performance has not really been juicy, except for some very few. Besides, fund raising in the primary market for now may not be encouraging due to market tempo,” a senior investment advisor and economist at a leading investment banking firm said.

  • CBN, NDIC to monitor banks’ compliance with ATMs’ directive

    CBN, NDIC to monitor banks’ compliance with ATMs’ directive

    The Central Bank of Nigeria(CBN) is to monitor compliance with its directive stopping the N100 depositors pay for using other banks’Automated Teller Machines (ATMs).

    CBN will deploy examiners in banks to ensure compliance, Managing Director, Nigeria Deposit Insurance Corporation (NDIC) Umaru Ibrahim said.

    He was speaking at a workshop for finance reporters in Dutse, the Jigawa State capital.

    Last Tuesday, CBN stopped the N100 charge for the use of ATMs other than those of a depositor’s banks.

    The decision followed a meeting at the lenders’ committee comprising executives banks directors and top CBN officials.

    Depositors hitherto paid N100 per withdrawal for rising other banks’ ATMs.

    The NDIC boss said the decision to stop the charge would increase the patronage of ATMs and deepen the financial inclusion strategy.

    He listed the other projects meant to promote financial inclusion to include the cash-less policy designed to bring low-cost, secure and convenient financial services to urban, semi-urban and rural areas in the country.

    Ibrahim called for the promotion of all-women microfinance banks, adding that evidence from other countries indicate that such institutions have the potential to promote easy access to credit among rural women, especially at the group levels.

    He said the platform could also be used to mobilise more funds from the group. He said out of the total number of provisional and final microfinance bank licences issued by the CBN, the north, including Federal Capital Territory had only 24.75 per cent, and therefore called on the state governments in the region to establish more grassroots banks.

    According to him, financial inclusion, alternatively characterised as ‘access to finance’ has been defined as ‘universal access at reasonable cost, to a wide range of financial services to everyone needing them, provided by a diversity of sound and sustainable institutions.’

    He said the CBN and NDIC have and uphill task in improving financial inclusion given the relatively low level of penetration of financial services in the country.

    The NDIC boss said the rising trend in bank customers’ complaints is a source of worry to the regulators.

    He said such complaints arising mainly because of poor customer service, high bank tariffs, frauds and forgeries as well as bank distress could threaten confidence in the banking system.

    He said banks are aware of whom their customers are but many of them do not appreciate the need to determine their expectations and how to manage them.

    “The inability to manage customers coupled with the serious corporate governance issues could explain the high frequency of complaints among bank customers in Nigeria. To determine the causes of customer complaints and design appropriate strategies for preventing and controlling it, the need to determine customer expectations and how to effectively manage them cannot be overemphasised,” he said.

  • CBN to sell N116.2b TBs, DMO, N50b bonds

    • Naira drops to two-month low

    The Central Bank of Nigeria(CBN), which sells bills to help manage currency supply within the market,is offering N116.2 billion ($733 million) of treasury bills on Thursday, November, 22. Also, the Debt Management Office is scheduled to sell N50 billion of 10-year and seven-year bonds next week, according to Bloomberg news.

    Meanwhile, the naira declined against the dollar on the interbank market, yesterday, reaching a two-month low and capping the worst week in 12, as foreign inflows and oil company foreign-exchange sales were said to be limited.

    It retreated 0.3 percent to N158.52 a dollar, the lowest closing level since September 5. It retreated 0.7 percent this week, according to data compiled by Bloomberg.

    “It’s a temporary shortfall in supply this week,” Samir Gadio, a London-based emerging markets strategist at Standard Bank Group Limited., said in an e-mailed reply to questions yesterday. “I don’t think there were significant foreign-exchange sales from oil companies and foreign inflows have been less robust.”

    Oil-producing companies, which sell dollars to meet domestic expenses, are the second-biggest source of foreign currency after the Central Bank, which sells dollars on Mondays and Wednesdays to keep the naira within a three percent band around N155 per dollar.

  • CBN begins phased execution of ‘Guide to Bank Charges’

    CBN begins phased execution of ‘Guide to Bank Charges’

    The Central Bank of Nigerian (CBN) has begun a phased implementation of ‘Guide to Bank Charges’.

    The guideline is meant to protect bank customers’interest in their dealing with lenders, The Nation has learnt.

    Last week’s lifting of N100 transaction fee on other banks’Automated Teller Machines (ATMs) by the Bankers’Committee 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 had last Tuesday agreed to stop ATM charges.The agreement was the highpoint of a meeting between the Bankers Committee made up of Chief Executive Officers of Deposit Money Banks, directors and top officials of the CBN and NDIC. Before now, account holders paid N100 per withdrawal through ATMs.

    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 critical issues, 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 all areas to bring the review to completion.

    He said the exercise was of efforts to reduce the cost of banking and financial services on customers.

    In a statement the CBN said such 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.

     

     

     

  • ‘CBN won’t force mobile money firms to merge’

    ‘CBN won’t force mobile money firms to merge’

    The 15 licensed mobile money operators will not be forced into mergers and acquisition because of their weak capital base, an  official of the Shared Services Department of the Central Bank of Nigeria (CBN), Mr Chidi Umeano, has said.

    He was reacting to speculations that the firms may merge and acquisition to improve efficiency and speed up the reduction of the unbanked population from 65 per cent to 25 per cent by 2015.

    Speaking to The Nation, Umeano said the operators’ decision to combine businesses was an investment decision and should be treated as such.

    He said: “The role of CBN is to issue guidelines to the operators after carefully conducted pilot studies to determine the readiness of the firms that were given Approval In Principle (AIP) to operate mobile money transactions. Since the companies have board of directors as stated in their operational guidelines, they must take the decision in line with that arrangement. It is the duty of their boards to sit and arrive at a decision that is suitable for them. But on the part of CBN, we would not ask the mobile money firms to merge their operations. The issue of mergers and acquisitions has nothing to do with the CBN”.

    He said the apex bank wanted to be informed, in case the operators were planning merger arranging.

    Umeano said though CBN was putting in place measures to ensure a virile, efficient, and enduring industry that would galvanise the growth of the economy, adding that it was not in its interest to force any of mobile money operators to engage in mergers.

    In a related development, the Managing Director, Nigerian Inter-Bank Settlement System (NIBBS), Mr Ade Osinubi, expressed fear that the expensive nature of operating mobile payment system may make the operators to merge their businesses.

    Osinubi said the operators were facing challenges, adding that the development had affected their activities. He observed that mobile money system was yet to take off in the country, considering their relatively non-impressive turnover.

    Also, the Chief Executive Officer, Mobile Money Africa, Mr Emmanuel Okowgale, said the firms had not been able to get a large pool of customers to work with. He said the operators had not got huge subscribers base, because of poor awareness, infrastructure, liquidity, among other problems.

    He said mobile money firms in countries, such as Kenya have recorded billions of dollars as turnover because they have a solid infrastructure in place, as against Nigeria where the operators are still battling with the issue of getting enough agents for their services.

    Okowgale said the operators need to strengthen their capacity to record meaningful growth, arguing that they have a large market to operate with.

  • Non-Interest Banking in Nigeria -Tax Issues (I)

    Non-Interest Banking in Nigeria -Tax Issues (I)

    The storm surrounding the introduction of Non-Interest Banking (NIB) commonly called Islamic banking is gradually settling down and it is important to begin to exhume the challenges that might crop up in its operations with particular reference to the taxation of the sub-sector by the relevant tax authorities, especially the setting of standards for the type of taxes that apply and that are to be collected from the transactions.

    As the name implies, Non-Interest Banking (NIB) is a system of financial services that provide unique services in accordance with Islamic religious jurisprudence and Sharia principle and fully regulated by the relevant regulatory authorities as provided for in sections 9, 23 and 52 of the Banks and other Financial Institution Act (BOFIA) 1991 as amended. The CBN is empowered by law, to issue licenses to appropriate entities for the establishment of Non-Interest Banks provided they meet the regulatory requirements.

    The establishment of an enabling ûscal and regulatory framework in the UK for Islamic Finance becomes more imperative today than ever. Though the Federal Inland Revenue Service (FIRS) technical Working Group on NIB is working assiduously to enunciate policies that will guide the tax regulation governance of this sub-sector it is also crucial for sector stakeholders to step in and make valuable contribution to engender a mutually acceptable tax system on the operations of Islamic Banking in the Country.

    Islamic financial instruments continue to attract consumer attention, with the central element of being interest-free products in compliance with Islamic Sharia law. According to financial sources, the value of funds involved in Islamic banking worldwide grew by an average of 15% annually over the past three years. Some analysts estimate Islamic banking to be worth some $500 billion, with the Middle East controlling a quarter of those assets. Kuwait is reportedly the biggest contributor, accounting for almost 29% of the sector’s value in the Gulf region. It is followed by Saudi Arabia with about 27%, and the UAE with 15.2%. Nigeria with its 160 million people should definitely not be left out of emerging business frontier. The unbanked population can be a key target.

    There are a number of challenges that have to be addressed for the successful

    Introduction and operation of Islamic banking in Nigeria. Indeed the challenges are numerous, the absence of skilled workforce and the technical capacity to even regulate Islamic financial institutions are lacking and must be resolved before we can witness a boom in this banking sub-sector.

    Much has been said of the Lack of Sharia-compliant liquidity management instruments. Islamic banks cannot invest their excess liquidity in interest based instruments, which are the liquidity management instruments in the money market.

    This puts them at a disadvantage side by side with conventional banks. The current interbank market and the instruments used by the Central Bank for monetary policy operations are all interest-based with no equivalent government securities or other money market instruments that are Shariah compliant, all of which are essential to avoid a liquidity bottleneck for Islamic banks when they come into operation.

    Another key deficiency that has been hotly discussed is the lack of knowledge of accounting and auditing standards pertinent to Islamic financial institutions. The balance sheet structure of Islamic banks is unique, and even though the work of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) on accounting and auditing standards for Islamic banking products is available, there is the need to train conventional accountants and auditors in the application of the standards and how it can be used with the recent benchmark of the International Financial Reporting Standards (IFRS).

    Should NIB products be taxed as conventional banking products? One of the best ways to understand Islamic banking is to gain an understanding of the products that are considered acceptable. The important thing to remember is, as it is with the Christian Bible, there are several differing interpretations of what the Holy Quran and the Hadith actually intend. As a result, not all of these products are universally acceptable (particularly those where the return is determinable in advance), but they are a useful guide. Several of these are covered below:

    Wadiah (Safekeeping)-In Wadiah, a bank is deemed as a keeper and trustee of funds. A person deposits funds in the bank and the bank guarantees refund of the entire amount of the deposit, or any part of the outstanding amount, when the depositor demands it. Mudarabah (Profit Loss Sharing) Mudarabah is an arrangement or agreement between a capital provider and an entrepreneur, whereby the entrepreneur can mobilise funds for its business activity. Musharakah (Joint Venture), this concept is normally applied for business partnerships or joint ventures. The profits made are shared on an agreed ratio, while losses incurred will be divided based on the equity participation ratio. This concept is distinct from fixed-income investing (i.e. issuance of loans).Murabahah (Cost Plus), this concept refers to the sale of goods at a price, which includes a profit margin agreed to by both parties. The purchase and selling price, other costs and the profit margin must be clearly stated at the time of the sale agreement. The bank is compensated for the time value of its money in the form of the profit margin. Bai’ Bithaman Ajil (Deferred Payment Sale), this concept refers to the sale of goods on a deferred payment basis at a price, which includes a profit margin agreed to by both parties. This is similar to Murabahah, except that the debtor makes only a single instalment, on the maturity date of the loan. By the application of a discount rate, an Islamic bank can collect the market rate of interest. Qardul Hassan (Benevolent Loan),t his is a loan extended on a goodwill basis, and the debtor is only required to repay the amount borrowed. However, the debtor may, at his or her discretion, pay an extra amount beyond the principal amount of the loan (without promising it) as a token of appreciation to the creditor. Ijarah Thumma Al Bai’ (Hire Purchase), these are variations on a theme of purchase and lease back transactions. There are two contracts involved in this concept. The first contract, Ijarah contract (leasing/renting) and the second contract, Bai’ contract (purchase) are undertaken one after the other.

    Bai’ al-Inah (Sell and Buy Back Agreement)-The financier sells an asset to the customer on a deferred payment basis and then the asset is immediately repurchased by the financier for cash at a discount. The buying back agreement allows the bank to assume ownership over the asset in order to protect against default without explicitly charging interest in the event of late payments or insolvency. Sukuk (Islamic Bonds), in keeping with the prohibition of riba, a conventional bond is not permitted. A Sukuk bond, however, is asset-backed and the returns on it are not fixed, but are linked to the return on the assets purchased with the proceeds of the issue.

    Interestingly there is no tax law specifically to regulate the NIB in Nigeria. The current tax legislation therefore has to be strengthened urgently to accommodate the operations of the NIB institutions. Aside the Jaiz Bank Plc and Lotus Capital currently operating non-interesting banking institutions in Nigeria non other exists. Clear tax legislation is the required to back the guidelines created by the Central Bank to spur up growth in this sector.

    The key issues are; how would Company Income Tax be charged on Musharaka, Mudarabah and Sukuk (is it be charged like conventional bonds)? Or VAT on Ijara? The collection of taxes such as Company Income Tax, Value Added Tax, Capital Gains Tax, Withholding Tax and Stamp Duty need to be properly highlighted and guided by appropriate legislation to avoid multiple taxation of the sub-sector.

    Does the purchase and then onward sale of assets by the Islamic financier result in any capital gains or other profit-based tax? What will be an equitable VAT framework on Islamic banking products? Issues remain unclear. Is VAT, which tends to be a key tax type with greater focus on delivery procedure in commodity murabaha/tawaruq transactions, be an issue? Islamic Finance requires proper documentary evidence of the transfer of title from the original supplier to the financier.

    From a UK perspective, in light of the changes made by the government overtime, changes have been progressively incorporated into UK tax legislation since 2003 with particular changes relating to Sukuk in the 2007 Finance Act with more changes done in the 2009 tax legislation. These changes will bring Sukuk legislation in line with conventional corporate bonds and securitisations and address capital gains and capital allowances issues.

    With the take-off of Islamic Banking there is a need to work with tax jurisdictions with established NIB tax legislation as a learning curve to guide the FIRS on the high-level tax implications of Shariah compliance, as well as on the day-to-day practical issues of complying with the intricacies of the existing Nigeria direct tax legislation.

  • CBN’s credit to banks drop to N275b

    CBN’s credit to banks drop to N275b

    Data from the Central Bank of Nigeria (CBN) Economic Report has shown that its credit to the banks stood at N275.7 billion last month after dropping by 18.9 per cent based on August figure.

    The specified liquid assets of the commercial banks stood at N5.2 trillion, representing 39 per cent of their total liabilities.

    The report said the level of liquid assets was 2.6 per cent below the preceding month’s ratio of 41.6, but nine per cent above the stipulated minimum ratio of 30 per cent. The loan-to-deposit ratio was 45.7 per cent and was 34.3 percentage points below the stipulated maximum target of 80 per cent for the industry,” it said.

    At N1.3 trillion, currency in circulation rose marginally by 0.4 per cent in the review month, in contrast to the decline of 0.1 per cent at the end of the preceding month. It said the development reflected, wholly, the 0.4 per cent increase in currency outside banks.

    According to the apex bank, relative to the level at end-December 2011, currency in circulation fell by 12.6 per cent. Also, total deposits at the CBN amounted to N6.8 trillion, indicating a decline of 1.5 per cent below the level at the end of the preceding month. It said the development reflected, largely, the fall in Federal Government deposits.

    “Of the total deposits, the percentage shares of the Federal Government, banks and “others” were 67.2, 24.6 and 8.2 per cent, compared with 70.1, 22.1 and 7.8 per cent in the preceding month,” it said.

    The report noted that the money market experienced tight liquidity condition during most of the month, following the review of the cash reserve requirement and the net open position (NOP) of banks in foreign currencies.

    Growth in the key monetary aggregate remained sluggish at the end of August 2012. Monthly, broad money (M2) rose by 2.8 per cent, because of the 3.3 and 0.5 per cent rise in foreign assets (net) and domestic credit (net) of the banking system.

    Relative to the level at end-December 2011, M2 grew by 3.5 per cent, owing, largely, to the rise in foreign asset (net) and other assets (net) of the banking system. Narrow money (M1) fell by 2.5 per cent below the level at the end of the preceding month.

    The reserve money (RM), rose by 5.4 per cent above its level in the preceding month. Available data indicated mixed developments in banks’ deposit and lending rates in August. The spread between the weighted average term deposit and maximum lending rates widened from 16.40 percent in July to 17.28 per cent points in August.

    Similarly, the margin between the average savings deposit and maximum lending rates widened to 21.99 per cent in the review month from 21.67 per cent in the preceding month. The weighted average interbank call rate rose to 19.10 per cent, from 15.19 per cent in the preceding month, reflecting the liquidity condition in the interbank funds market during the month.

    The value of money market assets outstanding at end–August 2012 was N5.9 trillion, showing an increase of 0.2 per cent over the level at end-July 2012. The development was attributed to the 0.8 per cent increase in the value of Federal Government Bonds outstanding.

  • CBN reviews policy on agric sector funding

    The Central Bank of Nigeria (CBN) has reviewed rules for lending to the agricultural sector of the economy. The apex bank The Nation learnt, took the decision after reports from banks and discount houses indicated that lending to the subsector remains a high-risk, which should be followed with caution.

    In a circular to all deposit money banks and other stakeholders in the agric funding chain released at the weekend, the CBN said agricultural lending accounts for approximately 1.4 per cent of formal lending, and has been on the decline since 2006 because of the perceived risk of the sector. This situation, it said, was because banks have limited understanding of and lack of confidence in the sector.

    To reduce the inherent risk in the level, the apex bank advised that going forward, lenders should conduct environment and social risk analysis and assessment of agricultural clients and activities before extending loans to them. The lenders, by this rule, are also expected to ensure that identified risks are adequately monitored and managed while adhering to local environmental and social laws.

    The CBN also wants lenders to be consistent with Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) agenda, ensuring that, they finance the manufacture and distribution of improved and high seeds; lending to indigenous seed companies and importers of seed varieties and ensuring that farmers are able to procure seeds directly from seed manufacturers by availing them adequate credit.

    Also, with support from industry stakeholders, banks are to establish agricultural value chain research development fund that produce high quality research on the needs of the sector. Lenders are also to encourage and finance providers of storage facilities for seeds, produce and other value-added products provided that they take into consideration energy efficiency issues.

    The apex bank said it is collaborating with local banks for the institution of principles that will assist them in the identification and management of complex environment and social risks associated with the provision of financial products and services to the agriculture sector.

    It is also meant to provide additional sector-specific guidance to supplement the Nigerian Sustainable Banking Principles Guidance Note and ensure that banks adopt relevant international standards and best practices in the management of environment and social risk.

    The principles will equally position agriculture as an attractive, rewarding and sustainable business opportunity given the large proportion of the population that depends on agriculture as a source of livelihood. “It is clear that agriculture is a practical means of reducing poverty, unemployment, food insecurity, whilst providing raw materials for industries and export in the medium to long term,” it said.

     

     

     

  • Voter Cards: CBN wants depositors to report defaulting banks

    Voter Cards: CBN wants depositors to report defaulting banks

    Depositors who were denied the opportunity of using their voter cards for identification in banks should forward their complaints to the Central Bank of Nigeria (CBN), its Director of Corporate Communication, Mr Ugochukwu Okoroafor has said.

    CBN had last month directed banks to accept voter cards duly signed and approved by the National Independent Electoral Commission (INEC) for transactions as part of its Know Your Customer (KYC) programme to promote financial inclusion in the country.

    Ugochukwu said though the apex bank has not received any complaints, depositors should report erring banks to the CBN.

    He said the three levels of Know Your Customer initiative was introduced to enable people with different means of identifications access the banking services.

    He said: “Though we are yet to hear that banks do not accept voter cards for identification, if there are depositors facing this problem, they should let the CBN know. Based on CBN’s study, 65 per cent of people are out of the financial system, representing over 90million of the 160 million Nigerian population. We want to ensure that 32.5 per cent of this figure is brought into the financial community before 2020. We would like to see a situation whereby Nigerians that have been excluded from financial activities, mostly women, embrace banking transactions. If identification is the major problem in the industry, we should do something about it to encourage more participation in the industry.”

    According to him, lack of proper means of identification is one of the major problems affecting operations in the industry, adding that the inability of many people to have driving licence, international passports, among other major means of identification, resulted in the introduction of voter cards for banking transactions.

    “What we are trying to do by the three levels of KYC initiative as stated in the policy guidelines, is to ensure that banks know their customers in details. Through this, banks would take lesser risks, guarantee the safety of funds, make more money and help in stabilising the system. It is not everybody that has the same level of identification.

    ‘’So, when there are multiple and varying means of identifications in the banking system, the more people come into the industry, the better for the growth of the industry and the economy in particular,” he added.

    The Association of Chief Compliance Officers of Banks in Nigeria (ACCOBIN) said the acceptability of voter cards for identification in banks is a welcome development. The association said banks would not leave any stone unturned to carry out a through customer due diligence.

    The association at a forum in Lagos said the approval of voter cards for transactions will give as many customers as possible an opportunity to have an interface with the banks.

  • Forex inflows decline to $27.5b

    Foreign exchange inflows to the economy dropped by 2.44 per cent from $28.19 billion in first quarter, to $27.50 billion in second quarter of 2012, data from the Central Bank of Nigeria (CBN) website has shown.

    However, total outflows increased marginally by 0.32 per cent from $10.09 billion, to $10.11 billion, while a net inflow of $17.38 billion was recorded in second quarter contrary to $18.10 billion in first quarter of this year.

    According to the apex bank, net inflow through the CBN declined by 17.07 per cent from $12.11 billion in the preceding quarter to $10.05 billion. Similarly, outflow through the bank declined marginally, by 1.70 per cent, from $9.76 billion in the first quarter of 2012 to $9.59 billion in second quarter.

    Total foreign exchange transactions through the bank therefore resulted in a substantially lower net inflow of $0.46 billion, which reflected in the marginal accretion to the stock of external reserves. The level of external reserves as at end June 2012 stood at $35.41 billion as against $35.20 and $31.89 billion in the preceding quarter and corresponding quarter of 2011.

    “The current level of reserves could finance 11.1 months of foreign exchange disbursements and 7.3 months of imports compared to 10.8 months of foreign exchange disbursements and 7.8 months of imports recorded in the pre-ceding quarter,” the report said.

    Analysis of foreign exchange utilisation by sectors revealed that $7.74 billion or 63.8 per cent was spent on importation of various items into the country in the second quarter.