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CBN Plans Tough Sanctions for Banks as Foreign Reserve Increases to $34bn

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By Tony Obiechina, Abuja

Governor of the Central Bank of Nigeria (CBN) Olayemi Cardoso has vowed to pursue an aggressive regulatory environment to reduce infractions in the country’s banking system.

Cardoso said this on Tuesday in Abuja at the Monetary Policy Committee meeting of the bank, the first since he assumed office in Sept.

2023.

He stated that an in-depth investigation was underway to determine the necessary actions against banks involved in infractions, stressing that the bank was in the process of formulating “stringent regulations” to cleanse and purify the country’s foreign exchange market.

The apex bank governor, while responding to questions on steps taken to promote trading on the foreign exchange market, revealed that its foreign reserves increased to $34bn as of February 20, up by $2bn from the $32.

23bn recorded at the end of January.

The naira has depreciated to an all-time low since the new administration floated the currency and unified the exchange rate windows.

The Nigerian currency weakened from over N700/$1 in May 2023 to over N1,500/$1 on Tuesday.

However, Cardoso said that the apex bank was moving to a “very aggressive regulatory environment”, adding that the CBN would do all within its powers to curb arbitrage aided by banks and BDCs.

He said, “What we are doing at the moment is a collaboration between the central bank and the law enforcement agencies to ensure that we can better understand what is going on in the market and where infractions are taking place. They will be speedily dealt with.

“Now, I must say that we are moving as far as the central bank is concerned, we are moving to a very aggressive regulatory environment, where those policies have been coming out, as you can see, and tolerance for people not to abide by the regulations that are coming out and to comply is zero.

“People will have to abide by those regulations, and those that do not will face the consequences. I can assure you that a very thorough exercise is going on to identify what needs to be done on banks aiding infractions.

“And once we come out with the outcome of those, it is not something that we will keep to ourselves. We will advise you accordingly and we will do what we have to do.”

According to Cardoso, the apex bank would continue to make the market more liquid and to ensure that those who are genuine and want to abide by the rules and regulations that have been set by the central bank will be free to do so, adding that those who do not should be ready to face the consequences.

“Gross external reserves stood at $34.51bn on February 20, 2024, compared with $32.23bn at the end of January 2024. The improvement was driven by reforms in the foreign exchange market and an increase in oil production amongst others in the global economy,” he disclosed.

Cardoso revealed that the apex bank had paid another $400m out of $2.2bn of valid FX backlog to those who were genuinely identified.

According to the CBN governor, the bank will work to restore the confidence of the public and remains committed to its FX backlog to businesses being owed.

He stated, “In terms of the backlog, we are committed to clearing the backlog of identified and genuine requests that are pending. We are committed to doing that and I can tell you that just today, we paid out $0.4bn to those that were identified, and we are committed to continuing doing so in one form or the other to those genuinely identified and proven cases.”

The CBN had a $7bn FX backlog when Cardoso assumed office as the apex bank governor on September 15, 2023.

However, the CBN governor stated in an interview that the legitimate FX obligation of the bank stood at over $4bn and the bank had cleared around $2.3bn with about $2.2bn remaining.

Also, the Governor stated that around $2.4bn of FX claims were not valid after the bank instituted a forensic audit of the claims.

Reiterating his stance on the suspension of intervention programmes and loans by the bank, the former Lagos State Finance Commissioner, said, “Interventions have two dysfunctions as far as I am concerned, from the central bank space. One is that it takes away a lot of your time for something that really and truly you do not have the expertise to do. And two, it also, if not carefully handled, creates a lot of distortions in your economy through the inflow of money supply. The interventions that took place in the recent past were estimated in excess of N10tn.

“I am not talking about ways and means. I am talking about interventions, over N10tn. What was the budget of the Federal Government of Nigeria? What was the budget of the largest state in Nigeria? Do the math and it will tell you the extent of damage. Too much of what may appear to be good things can do (harm) to an economy. So, for me, it is a major issue.”

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Federation Account Garners N7trn Revenue in Six Months – RMAFC

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By Tony Obiechina, Abuja

Revenue Mobilization Allocation and Fiscal Commission (RMAFC) yesterday disclosed that a total sum of N7.31 trillion accrued to the Federation Account between July and Dec. 2023.This was captured in the monthly report to the Federation Account Allocation Committee (FAAC) by the Central Bank of Nigeria (CBN) under the caption “CBN Federation Account Component Statement”.

This amount is higher than the sum of N5.
244 trillion realised in the first half of year 2023, according to a statement signed by the RMAFC Chairman, Mr. Mohammed Bello Shehu and made available to the media in Abuja.The chairman disclosed that out of the total gross revenue inflows into the Federation Account, the sum of N1,692 trillion was transferred to the Exchange Gain Differential Account, thus leaving a balance of N5.
475 billion for distribution.He added that from the amount stated above, the sum of N3.26 trillion was deducted as approved statutory deductions by the OAGF, leaving a net balance of N2.2 trillion for distribution to the three tiers of government within the period under review.The chairman explained that out of the N3.267 trillion statutory deduction indicated above, N2.251 trillion was transferred to the Non-Oil Excess Account as savings, thus leaving a net statutory deduction of N1.016 trillion with further augmentations for sharing among the three tiers of government received from some “reserve accounts.”The statement added that within the period under review, the net sum of N4 trillion was shared with the three tiers of government, an amount higher than the total sum of N3.06 trillion.In terms of percentages, the chairman stressed that “the statutory deduction in the second half of the year constituted 44.12 percent of the total gross inflow into the Federation Account in the six-month period, which was higher than the first half deductions of 42.31 percent (inclusive of transfer to the Non-Oil Excess Account).”On remittances by Revenue Generating Agencies (RGAs), the RMAFC chairman disclosed that out of the total gross revenue inflows into the Federation Account, the Nigerian National Petroleum Company Limited (NNPCL) remitted N874 64 billion in the second half of the year as against the zero-remittance made in the first half of the year.Similarly, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) remitted the sum of N1.56 trillion while the Federal Inland Revenue Service (FIRS) remitted N3.65 trillion

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PDP NEC Meeting Ends with Damagum as Acting Chairman

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By Johnson Eyiangho, Abuja

Peoples Democratic Party (PDP) 98th National Executive Committee (NEC) meeting yesterday ended without a word on the much talked-about replacement of the party’s Acting National Chairman, Amb. Iliya Damagum, an indication that he will continue to function in that position.

In an interview with newsmen after the meeting, the PDP spokesman, Hon.
Debo Ologunagba said for now, the party is focusing on issues of reconciliation and its stability, adding that the issue of the Acting National Chairmanship had been “deferred to the next NEC meeting, which is tentatively scheduled for August 15, 2024″.
Also speaking, the Governor of Bauchi State and Chairman of the PDP Governors’ Forum, Bala Mohammed said the party is united as there was no dissension and rancour.
In his words, “It was planned that the party would have an implosion. PDP is more than that. We have gone beyond all that. This party is united, guided by experience and constitutionality.”There were a lot of permutations and mischievous thinking outside there. But we looked at all the issues and we worked along our guidelines and constitution.“There is no problem or dissension and problem among members,” Mohammed said.The well attended NEC meeting was held amid tight security as police and personnel of the Department of State Services (DSS) condoned off roads leading to the PDP Secretariat, Abuja and diverted vehicular traffic.It will be recalled that the PDP National Working Committee (NWC) had passed a vote of confidence on Damagum during its meeting on Tuesday.A communique issued at the end of the three hours meeting commended all the organs of the party for their collective resilience, steadfastness and commitment towards the unity, stability and sustenance the party despite daunting challenges.The communique commended the efforts of the NWC in its effort towards rebranding the party and urged all party members to continue to work together for the success of the PDP for the benefit of Nigerians and sustenance of democracy in our country.

The document which was read by the PDP National Publicity Secretary, Ologunagba, however, expressed concern over what it described as the ill-implemented policies of the APC administration, leading to worsening insecurity, harrowing economic hardship, soaring unemployment rate, high cost of food and other necessities of life with pervading misery and despondency across the country.”NEC expresses serious apprehension over the spate of acts of terrorism and violence including the escalated cases of mindless killings, mass abduction of innocent Nigerians and marauding of communities in various parts of the country.”NEC condemns the insensitivity, nonchalance, incompetence and arrogance in failure of the APC administration which continues to conduct itself in a manner that shows that it has no iota of interest or commitment towards the wellbeing of Nigerians.”NEC also condemns the creeping totalitarianism and tendencies towards a One-Party State which is inimical to the peace, stability and corporate existence of our nation as well as the development of Democracy and good governance in the country,” it said.The communique demanded that President Bola Tinubu should urgently convene a special National Security Council meeting to proffer a holistic solution and measures to curb the disturbing insecurity with its attendant negative consequences on the nation.It also called on the president to “immediately rejig his Economic Team to bring in persons of proven integrity and competence without bias and vested interest to assist in repositioning the economy.”NEC further demands that the Federal Government should review all policies and programmes which are stifling the economy with suffocating effect on the lives of citizens; including the increase in price of fuel without cushioning measures, hike in electricity tariff, increased taxation and implementation of adverse fiscal policies,” the communique added.Present at the meeting were FCT Minister Nyesom Wike, former Vice President Atiku Abubakar and many other past and presently elected members of the PDP.

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CBN Reduces Banks’ Lending Rate to 50 Percent

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By Tony Obiechina, Abuja

Central Bank of Nigeria (CBN) yesterday announced a review of the loan-to-deposit ratio (LDR) for banks from 65 percent to 50 percent to align with the current monetary tightening.

LDR is used to assess a bank’s liquidity by comparing its total loans to its total deposits.

An increase in the loan-to-deposit ratio allows banks to expand their credits to businesses and individuals, however, a decline in LDR reduces their ability to loan customers from depositors’ funds.

CBN disclosed the increase in a circular titled “Re: Regulatory Measures to Improve Lending to the Sector of the Nigerian Economy”, signed by Adetona Adedeji, CBN Acting Director, Banking Supervision Department.

“Following a shift in the b  ank’s policy stance towards a more contractionary approach, it is imperative to review the loan-to-deposit ratio (LDR) policy to align with the current monetary tightening by the CBN,” the apex bank said.

“Accordingly, the CBN has decided to reduce the LDR by 15 percentage points to 50%, in a similar proportion to the increase in the CRR rate for banks.

“All DMBs are required to maintain this level and are further advised that average daily figures shall continue to be applied to assess compliance.”At the last monetary policy committee (MPC) meeting on March 26, the CBN retained the CRR at 45 percent and the liquidity rate at 30 percent.

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