Financial experts say Central Bank of Nigeria’s (CBN) proposed policy that will ensure that loan defaulters forfeit their deposits in others banks is commendable.
They said this in separate interviews with the News Agency of Nigeria (NAN) in Abuja.
Mr Solomon Itodo, a financial expert said the policy was a good one if it could be implemented fully and all parties involved have clearly defined roles.
“It will boost lenders’ confidence knowing that repayment is not tied only to accounts being operated with them.
“This, however, is dependent on the level of cooperation among banks given the level of competition for customer patronage.
“Unless there are sanctions which will apply for non compliance or access to carry out debits by the creditor from these accounts, this will just be another policy with good intentions and no real substance.”
Itodo, however, said that the full provisions of the policy should be made known, otherwise erring debtors would easily circumvent it in a number of ways like operating accounts in different company names or having accounts operated by proxies.
He added that to make the policy work, accounts which should be considered as payment accounts should include personal accounts and accounts of companies with directors.
Another financial expert, Mrs Grace Audu, said it would serve as a deterrent to people who collect loan from one bank and then disappear to go start another account in another bank.
According to her, it will help to totally sanitise the system.
She also said that some banks that had folded up or had to merge with other banks ran into problems because of such customers.
“Once CBN puts this into effect, the clause of Lien/set off will also apply in your accounts with other banks and not just the same bank.
“It will definitely reduce the bad loan portfolio of some banks, which will make them stronger and more profitable.”
Audu added that bank marketers would be able to breathe a sigh of relief as many of them do not like to market loans to small businesses because if they do not pay, the bank holds the marketers responsible.
This, she said, in turn makes many of the marketers lose their jobs.
“So this development will provide more guarantee for the marketers, and reduce the likelihood of losing their jobs because of such customers”, she said.
Some bank customers also applauded the policy.
Mr Nduka Adibe, a civil servant, said it was a good initiative as he knew quite a number of civil servants who took loans from one bank and moved on to the next bank to operate other accounts without offsetting the previous loan.
He said that with the Bank Verification Number (BVN), it would be easier for banks to implement the policy.
Adibe, however, said that the CBN should fine-tune the policy in such a way that banks do not victimse honest borrowers by taking over their deposits in other banks before payment time for the loan was due.
Mr Aminu Abdulwahab, a businessman, said although the policy may discourage small business owners from making deposits in banks, it would go a long way in enhancing others got loans with ease.
This, he said, was because the borrowers would be made to reveal their true financial status in other banks, a move that would embolden the lenders to give out the money.
NAN reports that Mrs Aisha Ahmad, the Deputy Governor, CBN, on Monday at the 345th Bankers’ Committee Meeting in Lagos, said that the bank was proposing to implement a policy that would make loan defaulters forfeit their deposits in others banks. (NAN)
Naira Redesign Encourages Financial Inclusion, Electronic Transactions – CBN
By Tony Obiechina, Abuja
The naira redesign will encourage expanded financial inclusion and other forms of electronic transactions, according to the Central Bank of Nigeria (CBN), yesterday.
CBN Director of Currency Operations, Ahmed Umar, stated this at the 2022 workshop for business editors and members of the Finance Correspondents Association of Nigeria (FICAN) in Port Harcourt yesterday.
Umar, represented by Amina Halidu-Giwa, the Head, Policy Development Division, Currency Operation Department of the bank, said the redesign would encourage many un-banked people to be included in the financial system.
According to him, it will discourage excessive carrying of cash and encourage other electronic means of transactions.
He said that when the un-banked were fully captured in the financial system, it would help form adequate data for effective planning for greater economic growth.
“Naira redesign will also help in reducing cash management expenditures, give visibility and control and will help the bank to know the volume of money in circulation.
“It will also help in fighting counterfeiting and money laundering,” he said.
The director said that contrary to rumours that the CBN would print other denominations apart from the redesigned N1000, N500 and N200, no other denomination would be printed.
Umar also said that the bank was not making money from the printing of the new notes contrary to insinuations.
He said that it was just a continuous process of printing money by the Nigerian Security Printing and Minting Plc, adding that no contract was given to outsiders for the printing.
Fielding questions on why the redesign was so simple, he said “we want to solve a problem and we have limited time to do that.
“Redesigning is about change of colour or size. The ink itself is a security feature,” he said.
Umar said that the redesign of the notes were long overdue noting that the N1000 notes had stayed for 17 years, N500 for 21 years and N200 for 22 years.
NDIC Pays 443,949 Failed Banks Depositors N11.83bn
By Tony Obiechina, Abuja
The Nigeria Deposit Insurance Corporation (NDIC), yesterday said it has paid a total of N11.83 billion to over 443,949 insured depositors and over N101.37 billion to uninsured depositors of all categories of banks as at June 2022.
Managing director of NDIC, Bello Hassan disclosed this at a workshop organized by the Corporation for financial journalists in Portharcourt yesterday.
The NDIC bank liquidation mandate entails reimbursement of insured and uninsured depositors, creditors, and shareholders of banks in liquidation.
“The liquidation activities, as of June 30, 2022, covered a total of 467 insured financial institutions in liquidation, comprising 49 Deposit Money Banks (DMBs), 367 Microfinance Banks (MFBs), and 51 Primary Mortgage Banks (PMBs) and out of the 49 DMBs in liquidation, the Corporation in September 2022 declared 100 per cent liquidation dividend in 20 of those institutions, meaning that the Corporation has realized enough funds from their assets to fully pay all depositors of the listed banks.
“As of June 30, 2022, the NDIC provided deposit insurance coverage to a total of 981 insured financial institutions.
“The breakdown includes 33 DMBs made up of 24, commercial banks, six Merchant Banks and three Non-Interest Banks (NIBs) plus two Non-Interest windows; 882 Microfinance Banks (MFBs); 34 Primary Mortgage Banks (PMBs); three Payment Service Banks (PSBs) and 29 Mobile Money Operators,” he explained..
Three papers were presented on the first day of the workshop namely, “Rising Ponzi Scheme and Investment Scam in Nigeria What We need to know; Understanding the role of premium contribution in an asante funding Deposit Insurance System; and The role of the media in addressing emerging issues in the banking industry”.
Naira Redesign: Abuja ACCI Wants Deadline Extended
The Abuja Chamber of Commerce and Industry (ACCI) has appealed to the Central Bank of Nigeria (CBN) to extend the deadline for the non-continuation of the use of the current currency notes.
The President of ACCI, Dr Al-Mujtaba Abubakar, made the appeal in a statement he issued on Tuesday, in Abuja in reaction to the recent announcement by the CBN on the redesigning of the country’s currency.
According to him, there have been various reactions from experts on the policy and while some experts agree with the CBN’s strategic objectives for the exercise, others differ.
“As a chamber, we recognise the advantages of this policy to include improvement in the integrity of the currency, curbing inflation, the efficiency of its supply and strengthening the strategy to conduct monetary policy, among others.
“However, we are not unaware of the cons of this policy on the national economy, specifically to the Micro Small and Medium Enterprises (MSMEs).
“We would recommend to the apex bank to intensify public awareness campaign on the need for people and businesses to transit cash outside the banking system to the banks,’’ he said.
Abubakar explained that the sensitisation would allay the fears of Nigerians, deepen the buy-in of the citizenry and build national support for the implementation process.
According to him, at the same time, the CBN should extend the deadline for the non-continuation of the use of the old currency notes.
“The chamber would also advise the CBN to provide financial and non-financial interventions (support) to cushion any likely negative impact this policy may have on businesses,’’ he said.
The president also said that the CBN, working with other stakeholders in the financial services eco space, needed to sustain and aggressively pursue and expand financial inclusiveness to cover unbanked segments of the society.
“This can be achieved through new procedures that match the peculiarities of the informal economy.
“The banking establishments also have a duty to harmonise bank charges associated with cash deposits,” Abubakar said.
The News Agency of Nigeria (NAN) recalls that the CBN said that the redesigned Naira notes would be released by Dec. 15, adding that existing ones would cease to be regarded as legal tender by Jan. 31, 2023. (NAN)
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