By Kelechi Mgboji Assistant Business Editor
The Bankers’ Committee, an umbrella body comprising the Central Bank of Nigeria, Deposit Money Banks (DMBs) and the Nigeria Deposit Insurance corporation (NDIC) has assured that the banks have enough capital to absorb shocks, stressing that there would be no distress in the system.
This is despite banks’ huge build up of Non-Performing Loans (NPLs) in deposit money banks (DMBs) estimated at over N2 trillion.
Briefing newsmen on the outcome of the 326th meeting of the Bankers’ Committee in Lagos on Thursday, Director of Banking Supervision, Central Bank of Nigeria (CBN), Tokunbo Martins, identified falling oil prices as major cause of rising NPLs in the industry, stressing that banks have set aside enough funds from their profits to cover the situation.
According to Martins, the committee discussed possible ways of arresting the situation which might involve debt factoring among others.
“But the most important thing is that banks are conscious of it. They are preserving capital. They have enough capital as we speak. They are not distributing profits as much as they would have, in anticipation of risks that might crystalize and knowing in their hearts that they need to have enough capital to absorb those risks as they happen,” the director stated.
Martins also revealed that the CBN had appointed Interswitch Limited and Innovative Operations Limited as super agents to facilitate banking services to local communities and all nooks and crannies of the country at affordable costs.
These super agents, who are expected to commence operation immediately, will recruit other agents that will distribute banking services to rural areas at cheaper prices.
Martins said that the Committee headed by the CBN Governor, Godwin Emefiele, reached a wide range of conclusions on issues that border on how to develop the economy, empower youths, create jobs and expand financial inclusion to make financial services to the citizenry in all parts of the country at cheaper costs.
She said that CBN would soon release funds arising from reduction in the Credit Reserve Requirement (CRR) for commercial banks for onward lending to manufacturers.
Members specifically agreed that the funds would soon be released to commercial banks for onward lending to manufacturers.
The Managing Director and Chief Executive Officer of Fidelity Bank Plc, Nnamdi Okonkwo, said that it was agreed among commercial banks with the apex bank to release funds accruing from reduction in the CRR reduction from 25 percent to 20 percent at the last monetary policy committee (MPC) meeting.
He said that the undisclosed sum would soon be released to commercial banks so that they (banks) would begin to disburse the funds to manufacturers who need credit facility at low interest rate.
On how to address foreign exchange crisis, the committee advised for import substitution and adjustment in consumption attitude, saying that demand management for foreign exchange is necessary at a time when government’s foreign exchange earnings crashed from $115 to less than $40 per barrel.
Also, Segun Agbaje, the managing director and chief executive officer of GT Bank Plc, a member of the Bankers Committee, specifically said, “We all have to make adjustments; you, me, everybody. Our consumption habit has to change because we have less money to spend. We have to invest in import substitution, and develop things locally. We all have to make sure that we make the best out of scarce foreign exchange that we have, and in the short and medium term make sure that we work on the demand.”
The Managing Director and Chief Executive Officer of Fidelity Bank Plc, Nnamdi Okonkwo, said that it was agreed among commercial banks with the apex bank to release to banks funds accruing from reduction in the CRR from 25 to 20 percent.
He said that the undisclosed sum would soon be released to commercial banks so that they (banks) would begin to disburse the funds to manufacturers who need credit facility at low interest rate.
“When CRR was reduced by five percent, from 25 to 20 percent, the intention was to release this five percent to banks to enable them avail loans to real sector borrowers at single digit.
“We agreed that CBN should work out modalities and hasten action towards releasing these funds arising from the drop in CRR to the banks so that they would soon begin lending it to the real sector. We are looking forward to making that real,” Okonkwo stated.
The Committee discussed ways to facilitate government’s youths entrepreneurship scheme launched in March with the target to empower about 10, 000 youth entrepreneurs in
agriculture, manufacturing, information communication technology (ICT) and corporate services.
Serving National Youth Service Corp (NYSC) members and post-NYSC graduates are target beneficiaries.
On ways to diversifying the economy, the committee said that agriculture remained a major area for achieving economic diversification which was why the CBN launched Anchor Borrower’s Scheme on which 78, 000 farmers particularly from Kebbi State were enrolled at the pilot phase of the scheme.
Stressing that as the rainy season approaches, more farmers from across the geopolitical zones of the federation are going to be enrolled in the agriculture initiative, and given an average of N410, 000 each to cultivate maize, wheat, sugar, other crops on an acre of land each.
On access to foreign exchange by fuel importers, CBN’s Acting Director of Corporate Communications, Isaac Okoroafor, said that there had been a lot of improvements in that regard.
However, he added that fuel importation was the exclusive reserve of the Nigeria National Petroleum Corporation (NNPC), and that the banks do not really have much to say in that regard.
