- CBN to Bar Errant Bank Customers From Forex Market
The Central Bank of Nigeria on Wednesday raised concerns about what it called the indiscriminate and suspicious manner some bank customers were spending dollars and other foreign currencies abroad through their naira debit cards.
Consequently, the regulator said it had through the Bankers’ Committee concluded that bank customers who spent above the $50,000 annual forex limit it imposed would be barred from the nation’s forex market.
She said, “In the CBN’s move to manage the demand for forex, there was a rule that was put in place that people are not allowed to withdraw more than $50,000 annually on their naira debit cards.
“For a while, the policy has been abused by bank customers, and the CBN had not taken any step to that effect. We have decided to take the steps now to enforce the rule. So, we want members of the public to remember that that rule is in place.”
She added, “All your accounts are linked to a particular Bank Verification Number. Now, that the BVN only allows you to withdraw only $50,000 per annum. If people continue to breach that rule, they will lose access to forex market.”
Martins also ruled out a possible lay-off of workers in the banking sector, saying the Bankers’ Committee was committed to keeping their staff members.
The CBN chief said, “One of the things we discussed, you must have been hearing about an impending retrenchment in the banking industry. So, we understand that many bank workers are experiencing fears about possible retrenchment in the industry.
“We discussed it among the banks; banks are committed to not retrenching their workers. So, whatever rumours are flying around about mass retrenchment happening or not happening, that is not true.”
Tokunbo also debunked a report by a Dubai-based investment bank that seven of the nation’s banks were having inadequate capital.
Arqaam Capital, the Dubai-based investment bank, had said seven Nigerian banks were undercapitalised with two of them close to being insolvent.
The CBN director said Nigerian banks were facing economic challenges but had strong capital buffers to weather the storm.
Martins said, “Banks have strong capital buffers; banks are feeling the headwinds.”
She said the Nigerian banking industry’s non-performing loan ratio of 11.7 was better than some European countries’ with about 15 per cent or 18 per cent NPL ratio.
According to her, the challenges facing the nation’s banking sector as regards the rising NPL is a global matter.
The Deputy Managing Director, Guaranty Trust Bank Plc, Mrs. Cathy Echeozo, said commercial banks through the committee were committed to allocating more forex to manufacturers in order to enhance economic activities and prevent lay- offs in the manufacturing sector.
She said, “We met with the team from the Manufacturing Association of Nigeria to ensure that manufacturers employ thousands of people and so on. “We discussed how to boost the supply of forex to our manufacturers so that they can continue to produce their products.”
The Managing Director, Stanbic IBTC Bank, Mr. Yinka Sanni, said the Bankers Committee discussed how the country could tap into the funding opportunities in the pension industry.
He said, “We were also reminded of the role/responsibility of banks to help grow the economy, especially the manufacturing sector. As bank CEOs, we agreed to ensure that the economy grows. We also looked at how the country can leverage the opportunity in the pension industry.”
Nigerian Banks’ Borrowings from CBN Surge 835% in a Month, Raising Liquidity Concerns
The Nigerian banking sector has witnessed an unprecedented 835% surge in borrowings from the Central Bank of Nigeria (CBN) in the span of just one month, igniting concerns over the nation’s liquidity stability.
Data reveals that banks’ dependence on the CBN has reached new heights, with their borrowings skyrocketing from a relatively modest N323.97 billion in August to N3.03 trillion in September. This remarkable increase underscores a growing reliance on the CBN’s support in times of financial stress.
This surge in borrowing activity has primarily been attributed to the CBN’s stringent monetary policies aimed at curbing inflation and managing the demand for foreign exchange. These policies have, in turn, squeezed commercial banks, compelling them to tap into the CBN’s Standing Lending Facility (SLF) for immediate liquidity needs.
Despite the escalating dependence on CBN funds, the Monetary Policy Committee (MPC) of the apex bank insists that the Nigerian banking sector remains fundamentally robust. MPC member Adenikinju Festus highlighted key indicators, including Capital Adequacy Ratio (CAR) and Non-Performing Loan (NPL) ratios, which still align with prudential standards. Furthermore, liquidity ratios have improved, and returns on equity and assets have risen.
However, the banking industry’s persistently high operating costs are raising alarms. In comparison to international standards, Nigerian banks are grappling with substantially higher operating expenses, prompting concerns about their long-term sustainability.
In a parallel development, the CBN’s Development Finance Department has disbursed a total of N9.714 trillion to various sectors of the economy over the past three years, with manufacturing and industries receiving the largest share at 32.6%.
Other sectors, including energy, agriculture, services, micro, small, and medium enterprises (MSMEs), export, and health, have also benefited significantly from these disbursements.
While the CBN remains committed to fostering sustainable economic growth, the surging dependence of Nigerian banks on short-term borrowings from the central bank is casting shadows on the sector’s long-term stability.
As Nigeria grapples with these liquidity concerns, the financial industry and regulators face the challenging task of charting a course towards a more resilient and sustainable banking environment.
Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting
The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.
Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.
In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”
While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.
President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.
The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.
The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.
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