The Central Bank of Nigeria 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, 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.
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.
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.
“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.
“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.
“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,” Martins said.
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, 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.
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.
“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.
“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.
“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,
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.