on Thursday expressed deep concerns about the growing amount of
Non-Performing Loans in the books of Deposit Money Banks and said it
would publish the names of chronic debtors.
The Director, Banking Supervision, CBN,
Mrs. Tokunbo Martins, who stated this at a press briefing after the
321st meeting of the Bankers’ Committee in Lagos, said the central bank,
in collaboration with the committee, had also decided to stop the
serial debtors from buying foreign currencies at the official interbank foreign exchange market.
market.
Also to be stopped from buying foreign currencies, according to her, are members of the board of directors of debtor companies as well as their subsidiary firms.
of the board of directors of debtor companies as well as their subsidiary firms.
She recalled that the Asset Management Corporation of Nigeria
had spent a fortune to buy toxic assets from the banks’ books in the
past and that it was important to stage timely interventions to
forestall a repeat of past mistakes.
had spent a fortune to buy toxic assets from the banks’ books in the
past and that it was important to stage timely interventions to
forestall a repeat of past mistakes.
Martins said, “So, it was decided that
going forward, one thing that we will do is to stop them (chronic
debtors) from getting access to foreign exchange.
Another thing that we also considered doing is to publish the names of
the borrowers that refuse to pay up. This is to ensure the continuous
safety and soundness of the banking industry.
.
Another thing that we also considered doing is to publish the names of
the borrowers that refuse to pay up. This is to ensure the continuous
safety and soundness of the banking industry.
“It is not all debtors, it is the bad and chronic debtors; those ones
that have deliberately refused to pay; those are the ones we are
talking about. Now, in the industry we have a standard, we don’t want
the NPLs to be more than five per cent of the total loan in the
industry.
that have deliberately refused to pay; those are the ones we are
talking about. Now, in the industry we have a standard, we don’t want
the NPLs to be more than five per cent of the total loan in the
industry.
“The total loan in the industry is in the
region of N13tn to N15tn. Right now, we have not reached the upper
limit of five per cent, but we don’t want to get there. That is why we
decided that we need to come out with this measure. Currently, the
industry average of non-performing loans is at 3.3 per cent and we don’t
want to get to five per cent; that is why we came up with this
measure.”
She said the CBN, in collaboration with
the Bankers’ Committee, had laboured to keep the banking industry safe
and sound, and that there was a need to ensure the continued safety of
the banks.
The Managing Director and Chief Executive Officer, Union Bank Plc, Mr. Emeka Emuwa, said the amount spent by naira debit cardholders overseas was rising fast and the banks were beginning to notice some arbitrate in the segment.
debit cardholders overseas was rising fast and the banks were beginning to notice some arbitrate in the segment.
Consequently, the CBN and the Bankers’
Committee will slash the annual allowable drawdown for each bank
customer, according to him.
The current annual allowable drawdown is $150,000 per customer but Emuwa did not specify the amount it would be slashed to.
He said, “We did find that in a number of
cases, people were using the cards in manners that were not expected of
them and there have been some arbitraging going on. So, in order to
sustain stability, what was agreed by the committee was that the limits
for the use of the naira debit cards would be reduced.
debit cards would be reduced.
“As a customer, if you have a dollar account, you will still have unfettered access to it; but for naira
debit accounts, the limits will be reduced to more judicious levels.
This specifically refers to the use of these banks’ products abroad,
because when they are used abroad, the merchants have to be settled.
debit accounts, the limits will be reduced to more judicious levels.
This specifically refers to the use of these banks’ products abroad,
because when they are used abroad, the merchants have to be settled.
“Even if it is the Automated Teller
Machines, the service provider, Visa or MasterCard has to be settled in
foreign currencies and we find that it is a drain on the foreign
resources available to finance our industries. So, there is going to be a
reduction in the annual allowable drawdown using naira debit cards
abroad.”
The Managing Director, Standard Chartered
Bank Nigeria, Mrs. Bola Adesola, said the foreign exchange market was
safe and sound, and was already moving towards a near convergence of
rates in the various segments.
This, she said, was as a result of the positive actions taken in the past by the central bank and the committee.
“As you are all aware, in the last couple
of months, several methods have been taken by the CBN and the banks to
try and attain some stability in the foreign exchange market. This has
been achieved because the demand for foreign currencies by businesses
has been continually met. All genuine demands for foreign currencies
have been met by the CBN,” Adesola said.
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