CBN to publish names of ‘chronic’ bank debtors, slash debit cardholders’ spending abroad

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, Mrs. 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.

According to PUNCH, Mrs. Tokunbo Martins 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.

Martins said:

“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.”

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.

…to slash debit cardholders’ spending overseas:

The Managing Director and Chief Executive Officer, Union Bank Plc, Mr. 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.

He said:

“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, Mrs. 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.

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