Bank customers will no longer pay charges on cash deposits
The newly appointed governor of the Central Bank of Nigeria, Godwin Emefiele, on Thursday unfolded a 15-point vision to build a model, people-centered bank capable of delivering price and financial system stability and promoting sustainable economic development.
During his first media briefing as CBN governor, Mr. Emefiele said his vision was inspired by an understanding of the bank’s mandate. He stated that his administration would strive to create an environment that would enable Nigerians live better and more fulfilled lives.
To realise this vision, Mr. Emefiele said the CBN would immediately commence pursuing policies that would promote the sustainability of the already achieved macro-economic stability in the system.
This, he said, would involve a monetary policy that would gradually reduce interest rates to enhance access to cheap finances and reduce the cost of credit borrowing; maintenance of exchange rate stability and promotion of effective management of potential threats to the financial system stability.
He said the Central Bank would ensure that it stepped up its banking supervisory role through the pursuit of a better risk-based supervision framework and build on the successes of the cashless policy under the existing payment system.
He also spoke of the economic development responsibilities of the CBN; agenda for development finance; new framework for funding small and medium scale enterprises, SMEs as well as supports to the agricultural, power, health, oil and gas sectors of the economy.
In specific terms, the new CBN boss said the focus of his leadership would be to maintain exchange rate stability and preserve the value of the domestic currency.
“We will sustain the managed float regime in the management of the exchange rate, as this will allow the Bank to intervene when necessary to offset pressures on the exchange rate. To support this strategy, we will strive to build-up and maintain a healthy external reserves position and ensure external balance,” he said.
On efforts to ensure financial system stability, he said apart from liaising with the relevant stakeholders to aggressively shore up reserves, the CBN would engage the fiscal and political authorities to improve the banks’ policy buffers to create space for monetary policies.
He said the CBN would strengthen its macro-prudential regulation by improving its supervisory diligence, ethical standards and the highest level of professionalism.
He promised to strengthen risk-based supervision mechanism of Nigerian banks to ensure overall health and banking system stability. He noted that banks would be expected to proffer remedies to weaknesses in examination reports to check the incidence of non-performing loans.
The country’s recent rebased gross domestic product, GDP, Mr. Emefiele said, had rendered the macros-prudential thresholds inadequate, and therefore the need to consider measures to redress the anomaly.
Some of these measures, he said, included zero-tolerance policy on fraudulent borrowers by collaborating with commercial banks to improve the credit culture in the country’s banking system.
“The CBN’s focus would be directed at serial debtors who access loans from different banks and default on all of them, even when they have the means to pay,” he stated.
He spoke of the need to enhance the operation of credit Reference Bureaus; establish secured Transaction and National Collateral Registry; and strengthen the sanction system by blacklisting companies/individuals found to be serial loan defaulters.
He said the CBN would implement stringent loan provisions and penalties for banks that lend to blacklisted persons and companies, while intensifying collaboration with relevant agencies, including the Justice Ministry, to strengthen bank’s ability to enforce contracts and recover matured debts.
On the cashless policy, which is billed to go nationwide from July 1, the CBN governor announced new charges on cash deposits and withdrawals.
According to him, in view of the complaints by bank customers about charges on cash deposits, which resulted in people devising various means, including opening of multiple accounts to avoid the charges, the CBN decided to abolish all charges on deposits with immediate effect.
However, charges on withdrawals would be continue at the current rate of three per cent for individual transactions in excess of N500,000, and five per cent for corporate transactions in excess of N3 million.
On efforts to promote economic development, Mr. Emefiele expressed concern about the growing rate of youth unemployment, currently at about 54 per cent. He assured that the CBN would swiftly identify productive sectors of the economy and channel credit towards them to increase employment and reduce poverty.
On the new framework for funding SMEs, he said rather than see it from a social development perspective, a business approach should be adopted, which would require a strong involvement of the private sector.
This, he said, would combine the business profit motives of the private sector with the development objectives of governments towards realizing set objectives.
On the agricultural sector, he said the CBN would revisit the goal of the interventionist programmes to ensure high value addition in fund provided. He pointed out that interventions in this sector would henceforth be driven towards improving productivity in areas with high domestic demand and supply. He identified some of these areas to include rice production, fish, wheat and sugar to conserve foreign exchange.
The CBN, he said, would facilitate investments in the key sectors of the value chain in the power sector, while also supporting efforts to domesticate oil and gas production activities.