• Thursday, May 30, 2024
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CBN assures strengthening banks to enhance credit supply


As part of its four pillars reform geared towards enhancing the quality of banks, establishing financial stability, enabling financial sector evolution and ensuring that the financial sector contributes to the real sector, the Central Bank of Nigeria has reaffirmed its commitment to bring to the barest minimum factors that interrupt the supply of credit to banking customers.

“That is basically one of the things we have been concentrating on ever since we came out of the crisis that erupted between 2009 and 2011,” said Kingsley Moghalu, CBN deputy governor in charge of financial system stability directorate.

BusinessDay had on Wednesday, May 15, 2013 reported that the CBN was pursuing a new sustainable banking principle, which seeks to make deposit money banks (DMBs) to consider all loan requests made to them by customers without discrimination.

The deputy governor also disclosed that the CBN had been able to reduce the volume of non-performing loans in banks, which were largely responsible for the recent distress recorded in the banking sector.

“Non-performing loans in banks are now just about 3 percent,” he said.

Non-performing loans are loans where the borrower is not likely to pay any interest nor repay the principal.

Moghalu, who was represented by Tokunbo Martins, director, banking supervision department, CBN, at Ernst & Young’s Financial Services Strategic Forum on Thursday, said the central bank was working hard to ensure strengthening banks, adding that the Asset Management Company of Nigeria (AMCON) can no longer acquire non-performing loans from banks.

AMCON was established in 2010 to buy up non-performing loans in banks and recapitalise eight distressed banks that were rescued by the CBN.

He said what the CBN had done was to ensure that banks focus on core banking services which include deposit and lending functions, adding that any bank that intend to go out of this must do it through a holding company structure.

He said the CBN has ensured that all banks implemented the global benchmark International Financial Reporting Standards (IFRS) to ensure high quality financial reports. “By December 2012, all banks have successfully adopted the IFRS.”

According to him, the apex bank has revised the code of corporate governance for banks, adding that very soon it would be released to the industry.

As part of efforts to forestall a recurrence of the 2009 crisis, the CBN has developed a crisis resolution framework, which is at implementation stage, he said, adding that the apex bank would introduce macro-supervision in addition to its micro-supervision and has strengthened cross-border supervision.

He added that the CBN has remained committed to strengthening customers’ confidence ever since it realised the need for customer protection during the banking crisis.