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FG Seeks Licence From CBN for Development Bank

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  • FG Seeks Licence From CBN for Development Bank

The Federal Government has applied to the Central Bank of Nigeria for the issuance of an operational licence to the Development Bank of Nigeria preparatory to its commencement of operations.

This was confirmed in a statement issued by the Director of Information in the Federal Ministry of Finance, Salisu Dambatta, in Abuja on Thursday.

The statement said the ministry had also completed the recruitment exercise for the executive management team of the DBN, adding that it expected the apex bank to grant the licence in no distant time.

The statement read in part, “The Federal Ministry of Finance has confirmed the completion of the recruitment exercise for the executive management team of the Development Bank of Nigeria and has formally applied for the issuance of its operational licence from the Central Bank of Nigeria, which is expected imminently.”

The DBN was conceived in 2014, but its take-off was fraught with delays under the previous administration.

The President Muhammadu Buhari administration had inherited the project with a determination to resolve all outstanding issues and set a target of this year for its take-off.

The DBN will have access to $1.3bn (N396.5bn), which has been jointly provided by the World Bank, German Development Bank, African Development Bank and the French Development Agency.

The statement stated that the DBN was also finalising agreements with the European Investment Bank, adding that its operations would not in any way result in the extinction of the Bank of Industry, Bank of Agriculture or any other existing development bank.

It added, “The operations of the DBN is clearly distinct from other development banks as it is focused on supporting small businesses defined by size and not by sectors.

“The DBN will provide loans to all sectors of the economy, including manufacturing, services and other industries not currently served by the existing development banks, thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises.”

As a wholesale bank, the statement explained that the DBN would lend to microfinance banks, which will then give medium to long-term loans to the MSMEs.

The MSMEs contribute about 48.47 per cent to Nigeria’s Gross Domestic Products but have access to only about five per cent of available lending opportunities from the Deposit Money Banks.

The statement added that the influx of additional capital from the DBN would lower borrowing rates, adding that the longer tenure of the loans would provide the required flexibility in the management of cash flows.

This, it added, would give businesses the opportunity to make capital improvements and acquire equipment or supplies.

“As the economy diversifies, the growth of the MSME sector will have a positive impact on the economy through employment generation, wealth creation and economic growth,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

CBN Leaves Interest Rate Unchanged at 11.5 Percent

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Godwin Emefile

CBN Leaves Interest Rate Unchanged at 11.5 Percent

The Central Bank of Nigeria led Monetary Policy Committee (MPC) left the interest rate unchanged at 11.5 percent to aid economic recovery from recession.

The MPC lowered the interest rate by 100 basis points to 11.5 percent in the third quarter to boost capital inflow to the real sector of the economy and halt the continued plunge in economic productivity.

The members voted unanimously to leave the rate unchanged because of the poor macroeconomic factors caused by the COVID-19 pandemic, rising inflation and lockdown.

Asymmetric Corridor was also retained at +100/-700 basis points while Cash Reserve Ration (CRR) stood at 27.5 percent. The liquidity Ratio was left at 30 percent, according to the CBN Governor, Godwin Emefiele.

Emefiele disclosed this on Tuesday after two days of meeting. He added that the global economic outlook has started showing improvements.

The retention comes as no surprise to experts given the escalating inflation rate, weak economic productivity and the present economic recession.

Obadiah Mailafia, a former deputy governor, CBN said “I do not see them shifting ground on those key areas. It would be counter-intuitive to reduce the MPR in a time of rising inflation.

The government is facing what is increasingly looking like a fiscal crisis, as government revenues continue to fall while a sizeable portion of government funds are going into debt-servicing,” Mailafia stated, noting that “More than 400 federal agencies have been unable to pay salaries to public sector workers for several months a in a row. Nigeria’s economic challenges are compounded by the geopolitical challenges of banditry, violence and terrorism.”

“As expected, I did not see them shifting ground on those key areas. It would be counter-intuitive to reduce the MPR in a time of rising inflation.

“I, therefore, suspected they would want to leave things as they are in order to weather the current storm, in the hope that things will begin to improve by Q2.

“A stable and consistent monetary policy stance can help stabilize the economic outlook while helping actors to anchor long-term rational expectations,” the former CBN stressed.

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Banking Sector

Deposit Money Banks Pay N2.7 Billion as Customers Complaints Rise by 34%

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Deposit Money Banks Pay N2.7 Billion as Customers Complaints Rise by 34%

Nigeria’s Deposit Money Banks (DMBs) refunded banks’ customers N2.67 billion in the first half of 2020, according to the latest findings.

This represents a 63 percent decline when compared to the N7.2 billion refunded in the same period of 2019.

A breakdown shows “Bank received 2,051 complaints from consumers of financial services providers in the first half of 2020, compared with 1,528 complaints in the corresponding period of 2019. Of the total 1,167 or 56.9 percent were complaints on electronic/card, while 125 or 6.1 percent were on excess charges. Other complaints were, mainly, on frauds, dishonoured guarantees and unauthorised deductions/transfers, among others.

“A total of 1,519 complaints, including those outstanding from 2019, were resolved in the review period, compared with 1,548 in the corresponding period of 2019. Total claims in the review period in local currency and foreign currencies amounted to N4.58 billion and $151,647.82, compared with N8.70 billion and $315,475.54, respectively, in the corresponding period of 2019.

“Relief was brought to many of the affected customers as the sums of N2.67 billion and $144,176.68 were refunded in the first half of 2020, compared with the N7.20 billion and $315,229.02, refunded in the corresponding period of 2019.”

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Banking Sector

Ecobank Nigeria Received N50 billion 10-Year Bilateral Subordinated Loan

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Ecobank Nigeria Received N50 billion 10-Year Bilateral Subordinated Loan

Ecobank Nigeria announced it has received N50 billion 10-year subordinated Loan.

Adenike Laoye, Group Head, Corporate Communications, Ecobank Nigeria, disclosed this in a statement released through the Nigerian Stock Exchange.

The statement read in part, “The bilateral funding provides stable medium-term liquidity to the balance sheet of Ecobank Nigeria and positively improved its balance sheet ratios, especially the capital adequacy ratio by circa 300 basis points.

The transaction proceeds would be deployed to support Micro, Small and Medium Scale Enterprises (“MSMEs”) and Small Corporates.

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